SECTION 194R
ON WHAT? BENEFIT OR PERQUISITE WHETHER IN CASH OR KIND PROVIDED TO ANY RESIDENT PERSON IN CONNECTION WITH BUSINESS OR PROFESSION.
WHEN TO DEDUCT TDS? TDS WILL BE DEDUCTED BEFORE PROVIDING SUCH BENEFIT.
DATE OF APPLICABILITY OF SECTION – 01-07-2022
RATE OF TDS - @10% OF AGGREGATE AMOUNT OF BENEFIT OR PERQUISITE.
AMOUNT OF BENEFIT OR PERQUISITE – >RS 20000/- IN A FINANCIAL YEAR.
PERSONS NOT LIABLE TO DEDUCT – ANY INDIVIDUAL OR HUF WHOSE TURNOVER OR GROSS RECEIPTS FROM BUSINESS OR PROFESSION IS LESS THAN RS. 1 CRORE OR 50 LACS RESPECTIVELY.
THERE IS NO NEED TO CHECK WHETHER THE INCOME OF THE RECEPIENT (PERSON GETTING THE BENEFIT) IS TAXABLE OF TAX FREE.
CONSIDERATION IN KIND- IF BENEFIT OR PERQUISITE IS RECEIVED IN KIND THEN IT’S VALUE IS TO BE RECORDED AT FAIR MARKET VALUE OR AT VALUE AT WHICH IT IS PURCHASED.
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SOME CASES WHERE TDS U/S 194R IS REQUIRED TO BE DEDUCTED
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- BENEFITS ON THE OCCASION ON DIWALI (OTHER THAN EMPLOYEES)
- BENEFITS AND PERQUISITES GIVEN TO DEALERS (WHETHER CASH OR KIND)
- BAD DEBTS WRITTEN OFF
- FREE SAMPLES PROVIDED
- SPONSERED TRIPS ON ACHIEVING TARGETS
- PROVIDING FREE TICKETS TO AN EVENT
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SOME CASES WHERE TDS U/S 194R IS NOT REQUIRED TO BE DEDUCTED
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- TRADE DISCOUNTS, CASH DISCOUNTS & REBATES
- BENEFITS AND PERQUISITES GIVEN TO EMPLOYEES BY EMPLOYER (TDS TO BE DEDUCTED U/S 192)
- WINNINGS IN GAMES, LOTTERY ETC.
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FAQS
1) IF AMOUNT OF BENEFIT OR PERQUISITES GIVEN TO PERSON IS RS. 25,000/- TILL 1ST JULY 2022 THEN?
NO TDS IS REQUIRED TO BE DEDUCTED ON RS 25000 SINCE THE BENEFIT IS PROVIDED BEFORE 01 JULY 2022.
2) IF AMOUNT OF BENIFIT OR PERQUISITES GIVEN TO PERSON IS RS. 25,000/- TILL 1ST JULY 2022 AND RS 10000/- IS PROVIDED ON AND AFTER 01-07-2022?
NO TDS IS REQUIRED TO BE DEDUCTED ON RS 25000/-SINCE THE BENEFIT IS PROVIDED BEFORE 01 JULY 2022.
FOR RS 10000/- PROVIDED AFTER 01ST JULY 2022 TDS @10% WILL BE DEDUCTED THAT IS RS 1,000/-
3) IF AMOUNT OF BENEFIT OR PERQUISITES GIVEN TO PERSON IS RS. 15,000/- TILL 1ST JULY 2022 AND RS 10000/- IS PROVIDED ON AND AFTER 01-07-2022?
NO TDS IS REQUIRED TO BE DEDUCTED ON RS 15000/-SINCE THE BENEFIT IS PROVIDED BEFORE 01 JULY 2022.
FOR RS 10000/- PROVIDED AFTER 01ST JULY 2022 TDS @10% WILL BE DEDUCTED THAT IS RS 1,000/-
4) WHETHER THE AMOUNT OF GST TO BE INCLUDED IN THE VALUE OF BENEFIT OR PERQUISITE FOR TDS U/S 194R?
GST WILL NOT BE INCLUDED FOR THE PURPOSE OF VALUATION OF BENEFIT/PERQUISITE FOR TDS U/S 194R.
5) WHETHER SECTION 194R APPLY WHERE THE BENEFIT OR PERQUISITE IS PROVIDED TO A GOVERNMENT ENTITY?
THE PROVISION OF SECTION 194R SHALL NOT APPLY IF THE BENEFIT OR PERQUISITE IS BEING PROVIDED TO A GOVERNMENT ENTITY, LIKE A GOVERNMENT HOSPITAL, NOT CARRYING ON BUSINESS OR PROFESSION.
6) WHETHER SECTION 194R APPLY ON SUPPLYING OF FREE GOODS UNDER PROMOTIONAL SCHEMES LIKE ‘BUY MORE GET MORE’?
IF THE SELLER OFFERS 2 ITEMS FREE WITH THE PURCHASE OF 10 ITEMS. IN SUBSTANCE, THE SELLER IS ACTUALLY SELLING AND THE BUYER IS BUYING THE 12 ITEMS AT A PRICE OF 10 ITEMS. THUS, THE SELLER AND BUYER RECORD THE TRANSACTION AT THE SAME VALUE. NO TAX IS REQUIRED TO BE DEDUCTED IN THIS CASE.
7) HOW IS THE VALUATION TO BE CARRIED OUT FOR THE BENEFIT/PERQUISITE PAID TO THE RECIPIENT FOR THE PURPOSE OF THIS SECTION? –
IT WOULD BE VALUED AT FAIR MARKET VALUE EXCEPT IN BELOW MENTIONED TWO CASES: -
A. WHEN THE PROVIDER PURCHASED THE BENEFIT OR PERQUISITE BEFORE PROVIDING TO THE RECIPIENT, IN THAT CASE IT WILL BE VALUED AT PURCHASE PRICE.
B. WHEN THE PROVIDER MANUFACTURES SUCH ITEMS BEFORE PROVIDING TO THE RECIPIENT, IN THAT CASE IT WILL BE VALUED AT THE PRICE IT CHARGES FOR ITS CUSTOMERS.