Claiming that samples of medicines provided to doctors do not constitute 'freebies,' individual pharmaceutical companies and the Karnataka Drugs and Pharmaceuticals Association have approached the High Court of Karnataka.

They have challenged the June 16, 2022 circular issued by the Ministry of Finance by which it was directed that pharma companies have to deduct TDS (tax deduction at source) at ten per cent of the value of the free samples provided by them to medical practitioners.

"The free sample of medicines given to the medical practitioners is only to prove the efficacy and to establish the trust of the doctors on the quality of the drugs. This again cannot be reckoned as freebies given to the doctors or for promotion of its products," the petition that was heard by a division bench headed by the Acting Chief Justice claimed.

The High Court ordered issuing notices to the respondents and adjourned the hearing of the case on September 29.

The petition claimed that the circular was illegal and that including free samples under Section 194R of the Income Tax (IT) Act, along with freebies like gold, cash and laptops, was irrational. Section 194R was included in the Act earlier this year and came into effect on July one.

Recently, a controversy arose after income-tax raids on a city-based pharma company. The practice of giving free samples to medical practitioners was drawn into focus.

Pharma companies organise seminars and conferences for medical practitioners. The existing ethical code bars gifts to doctors or their families and it includes recreational activities and free tickets to events.

The Supreme Court is also hearing a plea about the need for a Uniform Code of Pharmaceutical Marketing Practices (UCPMP).

The petition in the HC claims that seminars and conferences organised by the pharma companies for doctors are to update them "Of the latest developments, which is beneficial to the doctors in treating the patients as well as the pharmaceutical companies.".

Therefore, "The value of free samples of medicines given to physicians by pharmaceutical companies, cannot be treated as freebies," according to the petition.