Under Section 194J of the Income Tax Act, the Karnataka High Court ruled that the Third Party Administrator (TPA) is obliged to Tax Deducted at Source (TDS) on amounts given to hospitals.
The petitioner is the owner of TTK Healthcare TPA Private Limited is a firm that provides 3rd party services on medical and health insurance schemes given by the insurance companies.
In a cashless policy, the taxpayers pay to the hospitals as a part of contracts between the policyholders and insurance companies which is one side while on the other side the taxpayers and insurance companies.
A survey initiated by the Deputy Commissioner of Income Tax for the premises of taxpayer has given a show-cause notice for FY 2003-04 to 2008-09 though which the taxpayers have asked to show cause that why he is entitled as the taxpayer as default under Section 201(1) and interest be not taxed beneath Section 201(1A) of the Act for non-deduction of tax beneath Section 194J 
The taxpayer edits that the hospitals do not earn Professional income and do not carry professional medicine.
