Section 194R – TDS on Benefits/Perquisites

1. SECTION 194R – TDS ON BENEFITS/PERQUISITES https://taxguru.in/income-tax/section-194r-tds-benefits-perquisites.html Article analyses Section 194R incorporating the clarifications of CBDT vide Circular No. 12/2022 dated 16.6.2022. SECTION 194R – TDS ON BENEFIT / PERQUISITE TO RESIDENT BY PERSON HAVING INCOME FROM BUSINESS/PROFESSION Applicable from 1.7.2022 Applicable to Any person having income from business and profession except: Individuals/HUF with turnover from business less than Rs.1 crore or profession less than Rs.50 lakhs in preceding financial year Limit applicable Rs. 20,000 in aggregate including the provision made in the period 1.4.2022 to 30.6.2022 However, provision of 1.4.2022 to 30.6.2022 not liable for TDS Rate applicable 10% Nature of payment for TDS deduction under Section 194R Any benefit or perquisite provided in cash or kind paid to a resident Recipient The entity to whom the benefit is given irrespective of whoever enjoys it such as director, partner, employee, relative, etc. Time of deduction for TDS deduction under Section 194R Prior to payment to recipient

2. Discharge of TDS liability under Section 194R Due payment 7th of the next month date of Type of payment Who will pay Proof of payment Amount on which tax to be deducted Cash Payer TDS Certificate Cash given Recipient Prior from payer to receipt Advance tax challan Fair Market Value of benefit/perquisite OR Kind or partly in kind and partly in cash 7th of the next month Fair Market Value of benefit/perquisite INCLUDING the amount of TDS paid Payer TDS Certificate Fair Market Value of benefit/perquisite in kind If purchased by payer then FMV will be purchase price If manufactured by payer then selling price will be the FMV Types of payments considered as benefit/perquisites Whether or not perquisite Payment type Capital assets such as car, land, etc. Sales discount/Cash discount/Rebates to customers Free Samples Offering more items at the price of fewer items Incentives such as car, TV, phone, gold Sponsoring vacations for recipient or his/her relatives Providing free tickets to events Medicine samples free to medical practioneers Social media influencer if they retain the product Social media influence if the return the product Out of pocket expenses incurred by service provider with invoice in name of service RECIPIENT Out of pocket expenses incurred by service provider with invoice in name of service PROVIDER YES NO YES NO YES YES YES YES YES NO NO YES

3. All Dealer GENERAL conferences to educate dealers/customers for new products, teaching sales techniques, addressing queries, reconciliation of accounts, etc. Dealer conference for specific participants selected on the basis of achievement of targets, etc. Leisure component of general dealer conferences Expenses of accompanying family at general dealer conferences Expenses of prior/subsequent stay of participants at general dealer conferences NO YES YES YES YES