Income tax crackdown on Freebies to doctors

The Regulations made by the MCI, even with the force of a law, bind and apply to doctors, not the pharma industry. This aspect may be evident to anyone who reads the MCI Regulations. Thus, in order to hold that there is an offence committed by the pharma industry in distributing free gifts, some law applicable to the pharma industry has to make the act of distributing free gifts an offence. In short, the MCI Regulations make it an offence for a doctor to receive free gifts, but the pharma industry commits no offence under the MCI Regulations. The situation is unlike the bribe giver and the bribe taker where both the parties are committing an offence as per the bribery laws. Thus, the CBDT circular cannot use the MCI Regulations to make an act committed by a person an offence when the Regulations do not apply to that person. The CBDT efforts will fail in court/Tribunal when a pharma company challenges the disallowance made on the basis of the circular.