In a strong statement for the pharma and medical sector, the Chairman of the Central Board of Direct Taxes Nitin Gupta said the tax department will not allow any violation on account of expenditures incurred by pharma companies to medical practitioners and doctors.
Talking to CNBC-TV18, Gupta said, “I can say that the tax laws are very clear and consistent that any violation, any expenditure incurred or violation of tax laws on any allowable expenditure and this applies to all sectors of the economy be it pharma or any other sector.
We expect that the stakeholders especially from the pharma sector comply with the law of the land laid down by NMC or by any other statutory bodies. And that is the law which we follow while allowing or disallowing any expenditure claimed.”
The relationship between pharmaceutical companies and healthcare professionals came under scrutiny in 2022. The central government had set up a high-level committee to examine the need for a new mechanism to regulate pharmaceutical marketing practices.
The committee is chaired by NITI Aayog member (Health and Nutrition), VK Paul, and also includes the secretary of the Department of Pharmaceuticals (DoP), secretary of Health and Family Welfare, Chairman of Central Board of Direct Taxes and joint secretary (Policy), DoP.
It was the Federation of Medical and Sales Representatives Associations of India (FMRAI), that had called for greater regulation of the pharmaceutical industry’s promotional practices, and marketing activities when it comes to healthcare professionals, doctors, and medical practitioners.
The tax department had alleged unethical practices and freebies to the tune of ₹1,000 crore offered by drugmaker Micro Labs. However, the Indian Pharmaceutical Alliance (a platform of large domestic drugmakers) was tasked by the National Pharmaceutical Pricing Authority to look into these violations, but after detailed scrutiny, it cleared Micro Labs of misdoings in promoting the popular drug Dolo-650. However, on tax violations, IPA added that it was beyond its capacity.