Sec 194r of income tax act

As we are aware, the Government is trying to collect more and more data by way of TDS and SFT so that more tax net can be established. With this vision and aim, from 01/07/2022, new TDS provision has been inserted where, 10% TDS is required to be deducted in case of any perquisite or benefit provided to another person in cash or in kind where the value of such benefit or perquisite is above 20000/-. History and related Legal Provisions Section 28 (IV) of the Act: The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. Section 194R of Income Tax Act: (1) Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of profession, by such resident, shall, before providing such benefit or perquisite, as the case maybe, to such resident, ensure that tax has been deducted in respect or such benefit or perquisite at the rate of ten percent of the value or aggregate value of such benefit or perquisite. Provided that in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in the respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be d...

Section 194R of Income Tax Act 1961 – TDS on Benefit or Perquisite arising from Business or Profession Serial No. Contents 1. 2. 3. 4. 5. 6. 7. Finance Act, 2022 inserted a new provision, Section 194R in the Income Tax Act, 1961 (hereinafter referred to as the “Act”) which came into effect from 1st July 2022. The section provides that where a Resident, or a Non Resident, provides , any benefit or perquisite (either in money or kind) to a person who is a Resident of India, which arises from business or profession of such Resident, the person providing such benefits or perquisite shall deduct tax at the specified rate from the value of such benefit or perquisite. Section 194R of The Income Tax Act, 1961: A Nutshell Date of Application On or after 1 st July 2022 Deductor Resident or Non-resident providing benefit or perquisite to a resident (arising out of Business or profession of resident) TDS deducted on Benefit or perquisite arising out of Business or profession of resident) Applicability on Benefit or perquisite received by a Resident Rate of Deduction 10% Exemption from Deduction Aggregate Value of benefit or perquisite is below Rs.20,000 in a year Non Application (Only for Individual and HUF) • The turnover of Business carried on by individual doesn’t exceed Rs. 1 Crore • The turnover of Profession carried on by individual doesn’t exceed Rs. 50 Lakh Scope of Section 194R of Income Tax Act To give a brief overview about this provision, Section 194R of the Act talks abou...

Last updated on February 7th, 2023 A new Section for TDS has been introduced in the Union Budget 2022. TDS under Section 194R relates to the deduction of tax on benefits or perquisites in respect of business and profession. This section has been mainly inserted to avoid misreporting of income that people are receiving in the form of any perks or other benefits in non-monetary form from the business or profession. • • • • • • • • • Applicability of Section 194R If any resident individual receives any gift, perks, incentive, or any other monetary or non-monetary benefit from a business or profession in cash, kind, or partially in cash and kind, and the value of such benefits or perquisites in monetary term exceeds INR 20,000 during the financial year to one beneficiary then this section is applicable to you. Who shall deduct TDS u/s 194R? If any business or profession is giving benefits or perquisites to any agent, channel partner, dealer, distributor, or any other person of an amount more than the specified amount during the financial year to one recipient then they are liable to deduct TDS under Section 194R. However, it is not applicable to the Individual/HUF to deduct TDS if the total sales don’t exceed INR 1 crore in the case of business and INR 50 Lakh in the case of a profession in the immediately preceding financial year. Purpose of Section 194R The main purpose of introducing this section is to avoid tax evasion. Previously the businesses while giving the perks, ben...

From July 1, Tax Deducted at Source (TDS) on benefits received from business for sales promotion will be applicable to social media influencers and doctors. The Central Board of Direct Taxes (CBDT) has released guidelines on the applicability of the new provision. The Union Budget had brought in the provision of TDS on such income to check tax revenue leakage by inserting a new section, 194R, in the Income Tax Act, 1961. It requires TDS at 10 per cent for any person providing benefit exceeding Rs 20,000 in a year to a resident. What comes under benefits and perquisite? Kamlesh C Varshney, Joint Secretary in the Finance Ministry, had explained the benefits, which he said include free medicine samples received by doctors, foreign flight tickets or free Indian premier League (IPL) tickets in the course of business and more. Mr Varshney emphasised that these should be disclosed while filing the income tax return, adding that it shouldn't be avoided based on the fact these items are not being sold. Section 194R will also apply to seller giving incentives, other than discount or rebate, which are in cash or kind, like car, TV, computers, gold coins and mobile phones. What if a doctor is working at a hospital? CBDT clarifies that in case of doctors receiving free samples of medicines while employed in a hospital, Section 194R would apply on distribution of free samples to the hospital. The hospital as an employer may treat such samples as taxable perquisite for employees and dedu...

The following points emerge from CBDT’s clarification in its Circular No.12/2022, dated 16.06.2022: • • No tax is required to be deducted under • Where a seller is selling its items from its stock in trade to a buyer and the seller offers two items free with purchase of 10 items, there would be no benefit or perquisite and no tax is to be deducted under section 194R since this is in substance selling items at a discount. The seller offers two items free with purchase of 10 items. In substance, the seller is actually selling 12 items at a price of 10 items. Let us assume that the price of each item is ` 12. In such a case, in substance, seller is selling 12 items at a discounted price of ` 10 per item. Therefore, this is discount/rebate and will not attract TDS under section 194R. • The above relaxation will not apply when a person gives incentives (other than discount, rebate) in the form of cash or kind such as car, TV, computers, gold coin, mobile phone etc. In other words, additional free items of the same item which is sold will be treated as discount. • If different item is given away free with item sold and the item given away free is from stock-in-trade of seller, TDS u/s 194R is not applicable. If item given away free by seller to buyer is not from his stock-in-trade or any cash incentive is given by seller to buyer, TDS u/s 194R is applicable. CBDT’s response to Question 4 in CBDT’s Circular No.12/2022, dated 16.06.2022, is reproduced hereunder for ready reference...

From July 1, Tax Deducted at Source (TDS) on benefits received from business for sales promotion will be applicable to social media influencers and doctors. The Central Board of Direct Taxes (CBDT) has released guidelines on the applicability of the new provision. The Union Budget had brought in the provision of TDS on such income to check tax revenue leakage by inserting a new section, 194R, in the Income Tax Act, 1961. It requires TDS at 10 per cent for any person providing benefit exceeding Rs 20,000 in a year to a resident. What comes under benefits and perquisite? Kamlesh C Varshney, Joint Secretary in the Finance Ministry, had explained the benefits, which he said include free medicine samples received by doctors, foreign flight tickets or free Indian premier League (IPL) tickets in the course of business and more. Mr Varshney emphasised that these should be disclosed while filing the income tax return, adding that it shouldn't be avoided based on the fact these items are not being sold. Section 194R will also apply to seller giving incentives, other than discount or rebate, which are in cash or kind, like car, TV, computers, gold coins and mobile phones. What if a doctor is working at a hospital? CBDT clarifies that in case of doctors receiving free samples of medicines while employed in a hospital, Section 194R would apply on distribution of free samples to the hospital. The hospital as an employer may treat such samples as taxable perquisite for employees and dedu...

Last updated on February 7th, 2023 A new Section for TDS has been introduced in the Union Budget 2022. TDS under Section 194R relates to the deduction of tax on benefits or perquisites in respect of business and profession. This section has been mainly inserted to avoid misreporting of income that people are receiving in the form of any perks or other benefits in non-monetary form from the business or profession. • • • • • • • • • Applicability of Section 194R If any resident individual receives any gift, perks, incentive, or any other monetary or non-monetary benefit from a business or profession in cash, kind, or partially in cash and kind, and the value of such benefits or perquisites in monetary term exceeds INR 20,000 during the financial year to one beneficiary then this section is applicable to you. Who shall deduct TDS u/s 194R? If any business or profession is giving benefits or perquisites to any agent, channel partner, dealer, distributor, or any other person of an amount more than the specified amount during the financial year to one recipient then they are liable to deduct TDS under Section 194R. However, it is not applicable to the Individual/HUF to deduct TDS if the total sales don’t exceed INR 1 crore in the case of business and INR 50 Lakh in the case of a profession in the immediately preceding financial year. Purpose of Section 194R The main purpose of introducing this section is to avoid tax evasion. Previously the businesses while giving the perks, ben...

As we are aware, the Government is trying to collect more and more data by way of TDS and SFT so that more tax net can be established. With this vision and aim, from 01/07/2022, new TDS provision has been inserted where, 10% TDS is required to be deducted in case of any perquisite or benefit provided to another person in cash or in kind where the value of such benefit or perquisite is above 20000/-. History and related Legal Provisions Section 28 (IV) of the Act: The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. Section 194R of Income Tax Act: (1) Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of profession, by such resident, shall, before providing such benefit or perquisite, as the case maybe, to such resident, ensure that tax has been deducted in respect or such benefit or perquisite at the rate of ten percent of the value or aggregate value of such benefit or perquisite. Provided that in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in the respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be d...

Section 194R of Income Tax Act 1961 – TDS on Benefit or Perquisite arising from Business or Profession Serial No. Contents 1. 2. 3. 4. 5. 6. 7. Finance Act, 2022 inserted a new provision, Section 194R in the Income Tax Act, 1961 (hereinafter referred to as the “Act”) which came into effect from 1st July 2022. The section provides that where a Resident, or a Non Resident, provides , any benefit or perquisite (either in money or kind) to a person who is a Resident of India, which arises from business or profession of such Resident, the person providing such benefits or perquisite shall deduct tax at the specified rate from the value of such benefit or perquisite. Section 194R of The Income Tax Act, 1961: A Nutshell Date of Application On or after 1 st July 2022 Deductor Resident or Non-resident providing benefit or perquisite to a resident (arising out of Business or profession of resident) TDS deducted on Benefit or perquisite arising out of Business or profession of resident) Applicability on Benefit or perquisite received by a Resident Rate of Deduction 10% Exemption from Deduction Aggregate Value of benefit or perquisite is below Rs.20,000 in a year Non Application (Only for Individual and HUF) • The turnover of Business carried on by individual doesn’t exceed Rs. 1 Crore • The turnover of Profession carried on by individual doesn’t exceed Rs. 50 Lakh Scope of Section 194R of Income Tax Act To give a brief overview about this provision, Section 194R of the Act talks abou...