What is the tax liability of a dental clinic?

1. Business Income for non- specified professionals

2. Professional income

@ Dhirajlal Sir...I am confused. If I own the clinic and employ my wife, then I pay @ 8% profit rates....and if my wife owns the clinic, she has to pay @ 50% profit rate????

Please note....my wife is not the only dentist in this clinic. She employs other doctors as well and she receives only a part of the total gross receipts as her professional income

Illustration; (for a month)

Total gross receipts:Rs.30000

Payment to my wife as professional fees: rs.6000

Payment to other dentists: Rs.10000 (average)

Plus there are other expenses as well

If my wife is the owner of the clinic.....she has to pay taxes @ 50% rates??? (50% of rs.30000, ie she has to pay taxes for rs.15000 per month???)

I felt its reasonable to consider her income under two heads ...buissiness and profession!!!!

"If my wife is the owner of the clinic.....she has to pay taxes @ 50% rates??? (50% of rs.30000, ie she has to pay taxes for rs.15000 per month???)"

There is slight misunderstanding here,

50% is not the tax rate ...... it is just as per slab rate.   

 50% is profit margin over the gross collection, when declared u/s. 44ADA.

Practically, if your earnings are less than that... then you can declare the lower/actual profits..... but for that you are required to maintain books of accounts and get them audited from a CA.
 

Yes i understand that 50% and 8% are not the tax i have to pay...they are just my presumed profits....No confusion

My querry is primarily regarding considering the clinic as a buissiness vs profession

Please read the scenario again(in case you had not read it)

I think you should properly read the second option, which works for both under business or profession....... i.e " if your earnings are less than that... then you can declare the actual profits..... but for that you are required to maintain books of accounts and get them audited from a CA."

The situation to proove your wife as a businesswoman while running the business of her own profession is rather costlier affair, then accomodating yourself within the system!!!

Of course sir...i understand that i could claim actual expenses and thus could get lower tax liabilities. But i was simply thinking of long term. Right now because earnings are low either way it doesn't matter much (presumed profits, actual profits, me as the owner, my wife as the owner all these wouldn't make much difference in the actual tax).....but in future if the earnings from the clinic were to increase, then these nuances will matter......Once i claim this as professional income, i can't later on change it to buissiness income....(the only thing i can switch between is  "taxation of actual profits vs taxation of presumed profits")....therefore i am merely trying to strike the right balance now itself

That is why going along with actual profits for now would not be right for me......Because once i did it-then i can't change the ownership in the subsequent years...nor can i switch from profession to buissiness or vice versa

Yes, you are correct......

But difficulty is the system now works on softwares, whereby many such practical difficulties faced by tax payers, specifically for professionals doing business.

One such example, Nursing homes are treated as business  and not profession. Many case laws in its favour (like Salini Hospital), but many such hospitals are stuck up in the computer for refunds, because their TDS has been deducted u/s. 194J !!!

So, good planning......... & Best of Luck......

Hi!! I need an urgent clarity this is the scenario.

I am in investor for a Dental Clinic but I am not a dentist.

I invest in the equipments infrastructure and all things needed to start the clinic. I also invest in the running cost of 6months for the dental clinic.

My family friend is a dentist. And he is willing to run the clinic. As per the medical regulations (KPME) we will need to register the clinic with a doctors medical license number.

Now we are thinking of taking this on a partnership entity.

As I am aware as a doctor my friend some tax exemptions will be there as I am aware please correct me of I am wrong.

But as an investor what should I do when it comes to tax filling will I also get tax exemptions from the income of the clinic.

Can some please help me out to understand how do I keep my books in order with the above scenarios or if I need to choose a different entity. Thanks!