With reference to the report, "Tax department must trust assessees: Jaitley" (July 4), the finance minister has assured us that he would make all grey areas in taxation clearer.
In an effort to stem tax evasion, the Income Tax Department introduced Section 40A(3) that prohibits all aggregate payments of over Rs 20,000 by bearer cheques or cash to a single entity or person in a day. The law came into effect on April 1, 2009. But it is being flouted by most of the big hospitals, which even in emergency cases and irrespective of the time of day, demand advance payments of lakhs of rupees in cash. The patient is neither admitted nor is medical care provided to him or her until the advance cash payment has been made.
Now, for the grey area. Why has no action being taken by the income tax department for such violations? Can the department disclose to the public how many hospitals have been booked for this violation?
Also, are the hapless patients or their relatives and friends, who have to make the large advance payments, in violation of the law? What should one do when confronted with a situation where Section 40A(3) is violated?
This is a fit case of a "grey area" where a quick clarification is essential from the finance ministry or the Central Board of Direct Taxes.
Angelo Extross Pune
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