TDS on hospital service

[velayutham panchatcharam]

I am in SEZ. We have credit account with private hospital for our employee treatment. When ever accident happen we will send our employee to private hospital and they will send bill every month. My question is whether TDS is applicabel for this service. Please note that hospital is charging service tax.

[Surender Gupta]

TDS on medical services u/s 194J is attracted. You may visit the following cases for more details: Dedicated Health Care Services TPA (India) Pvt. Ltd. and others and THE MEDI ASSIST INDIA TPA (P) LTD. Versus DCIT (TDS), CIT (TDS), CBDT & UOI

[DEV KUMAR KOTHARI]

With reference to the reply given by Shri Surendra Gupta with due respect to the views expressed by courts I feel that the cases were not properly presented before the Courts and as a result courts have rendered wrong judgments which need to be reviewed..

Hospitals are really  provider of some facilities and organizer of various services and are not receiving any fees for professional services rendered by them. Fees paid by hospital to doctors is professional fees, but charges paid to hospital including fees for doctors is  not in nature of professional fees.

Charges of hospitals include reimbursement for services and supplies availed for patient, supplies provided by hospital  room and equipment rent etc.

How room charge, or OT charges can be regarded as professional fees?

How cost of medicines can be considered professional fees?

How reimbursement for fees of  doctors, nurses, outsourced services for analysis and investigation etc. can be considered professional fees received by hospital?

The judgments are in context of TDS on payments made by TPA, and they will apply to a company who pay for treatment of employees as well. However,  as noted above the judgment may be binding, though it may not be correct.

When insurance company pays to hospital or Authorised service station, TDS is not required, then why TPA who is merely agent of insurance company is required to deduct tax while paying to hospitals.

You may refer an article on this subject on tmi.

[jitu parmar]

sir, i am jitu parmar, working for phoenix hospital as a tpa co-ordinator.

my question is that. we already pay the vat on pharmacy at the time of purchase,

but in the case of cashless. the company cut the tds. on whole hospital bill, including medicine, but my CA told me that when you pay the vat on pharmacy, then tpa dont cut the tds on our medicine bill,

so kindly explain what is right or what can i do for further refrance.

AI Summary

TDS on medical services: whether hospital bills for employee treatment attract withholding hinges on characterisation as professional fees.
Whether TDS under section 194J applies to payments to private hospitals for employee treatment is contested: some rulings treat such payments as fees for technical services attracting withholding, while critics argue hospital bills largely comprise non professional components (room, medicines, consumables, reimbursements) that should not be considered professional fees. The debate also addresses TPA agency status, insurer payment practice, and whether VAT on medicines affects withholding on the medicine component.