Mumbai Tribunal holds ambulance services qualifies as professional services; liable for withholding under S. 194J of ITA 1961

In the case of State Health Society Maharashtra ^[1] (Taxpayer), the issue before the Mumbai Income Tax Appellate Tribunal was whether payment made by Taxpayer for availing the emergency ambulance services is liable for withholding under Section (S.) 194J of Income Tax Act 1961 (ITA 1961) as “fees for professional services” or as payment for works contract under S. 194C of ITA 1961.

The Taxpayer, a Government authority, was engaged in implementing centrally sponsored “National Health Mission” in Maharashtra. For this purpose, the Taxpayer entered into a contract with a third party, BVG India Ltd. (BVG), for providing emergency ambulance services.

As per the Taxpayer, the scope of the arrangement with BVG was that BVG was required to provide services of transportation of patients in an ambulance to the nearest hospital. Further, the Taxpayer contended that payment for such transportation qualified as payment for work covered within the scope of S. 194C and hence was subject to withholding at the rate of 2%. On the other hand, the tax authority contended that the services provided by BVG were professional services and hence tax was required to be withheld at higher rate of 10% under S. 194J as fee for professional services.

The Mumbai Tribunal noted the terms of contract with BVG. As per the contract, BVG was responsible to deploy all the necessary medical equipment, medicines and emergency medical technicians (EMTs) being a registered medical practitioner at all times in the ambulances. Effectively, the ambulances were “mini hospital on wheel” with the presence of doctor, medicines and necessary medical equipment which were required to ensure invasive or non-invasive airway management of patients with basic or advanced monitoring in the first few critical hours.

Having regard to the terms of contract, the Tribunal held that the payment made to BVG for ambulance services was not for transportation simpliciter but qualifies as payment of fee for professional services subject to withholding at higher rate of 10% under S. 194J of ITA 1961.

^[1] [TS-666-ITAT-2026(Mum)]