The High Court of Karnataka on Thursday ordered issue of notice to the Central government on a PIL petition filed by the Karnataka Drugs and Pharmaceuticals Association, Bengaluru, and a few individual dugs manufacturing companies, seeking a declaration from the court that free distribution of medicine samples to the medical practitioners does not amount to freebies under the Income Tax Act, 1961.
The petitioners also questioned the legality of a circular, issued on June 16, 2022, by the Ministry of Finance stating that companies will have to deduct tax at source (TDS) for the value of the free samples of medicines given to the medical practitioners under Section 194R of the I-T Act, which deals with deduction of 10% income tax at source on benefit or perquisite in respect of business or profession.
A Division Bench, comprising acting Chief Justice Alok Aradhe and Justice S. Vishwajith Shetty, adjourned further hearing after ordering issue of notice to the Ministry of Finance.
