TDS ON PAYMENT TO HOSPITAL ON BEHALF OF EMPLOYEE

[abbas mukhi]

Sir,

We are making payment to hospitals (approved by CIT and non approved) for medical treatment/ surgery of our employees.

We have also our company's hospital but in major case we refer the case to above hospitals.Reference letter is issued by our company in this regard.

(1) Some times we are making payments directly to hospitals and (2) some times employees are paying to hospitals and we are reimbursing to employee

in the first case bills from hospitals are in our company's name and in second case bills are in the name of employee.

We have started to deduct TDS in (1) having reliance on Dedicated Health Care Services TPA (India) Pvt. Ltd. and others 2010 (5) TMI 98 - BOMBAY HIGH COURT and THE MEDI ASSIST INDIA TPA (P) LTD. Versus DCIT (TDS), CIT (TDS), CBDT & UOI- 2009 (8) TMI 85 - KARNATAKA HIGH COURT

but we are still in confusion regarding (2)....

Please guide experts....

[Ganeshan Kalyani]

Sir in my view no Tds is applicable on pure reimbursement. The employee have paid the bills and with all supporting they have submitted their claim which is being reimbursed. Thus there is relation between company and hospital in this transaction. Thanks.

AI Summary

TDS on medical payments: pure reimbursements to employees with supporting bills do not attract TDS, employer payments may. When the employer pays the hospital and the bill is in the company's name, the payment can give rise to a withholding obligation under TDS. Pure reimbursements to employees-where the employee pays the hospital, submits supporting bills and the employer reimburses-do not create a direct employer hospital payment relationship and, on the facts summarized, do not attract TDS withholding.