Freebies To Docs At Your Own Cost, Pharma Cos Told

The Finance Bill has pulled the plug on the practice adopted by pharmaceutical companies of claiming as a business deduction the cost of various freebies, including foreign trips provided to doctors.

In other words, since such expenditure can no longer be claimed as a business deduction, it will jack up the taxable profits (or reduce the business loss) of a pharma company and is likely to make handing out of freebies less attractive.

Diving deep into various contrary judicial decisions, the Explanatory Memorandum to the Finance Bill states: “The legal position is clear that the claim of any expense incurred in providing various benefits in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, shall be inadmissible under section subsection (1) of section 37 of Act being an expense prohibited by the law.”