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TDS under section 194R on free sample, foreign trips, gifts to effect Doctors &

"Tax will now be deducted under section 194R on free sample, foreign trips, gifts. Doctors and others will be affected."<br>TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Lawu00a0, Goods and Service Tax etc.<br>To know more visit https://taxguru.in/income-tax/tds-section-194r-free-sample-foreign-trips-gifts.html

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TDS under section 194R on free sample, foreign trips, gifts to effect Doctors &

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  1. TDSUNDERSECTION194RONFREESAMPLE,FOREIGN TRIPS,GIFTSTOEFFECTDOCTORS&OTHERS AUTHOR:UMESHSHARMA https://taxguru.in/income-tax/tds-section-194r-free-sample-foreign-trips-gifts.html Tax will now be deducted under section 194R on free sample, foreign trips, gifts. Doctors and others will beaffected. Arjuna (Fictional Character):Krishna, a new section 194R had been introduced in this budget. Recently the IncometaxDepartment hasissued acircular regardingthesame. Whatare thedetails inthe circular? Krishna (Fictional Character): Arjuna, Section 194R requires a person, who is responsible for providing any benefit or perquisite to a resident, to deduct tax at source @ 10% w.e.f 1.07.2022 of the value or aggregate of value of such benefit or perquisite before providing such benefit or perquisite in cash or in kind. The recent Income tax Department circular contains the cases where it has clarified the applicability of TDS under Section 194R. Arjuna(FictionalCharacter):Krishna,whatarethecasesmentionedinthecircularwherepaymentsor benefitsgiven toa residentwill beconsidered as“Benefits orPerquisites” undersection 194R? Krishna(FictionalCharacter):Arjuna,TDSunder194Rwouldbeapplicableinthefollowingcases: Anyassetgivenasbenefitorperquisitethatmaybecapitalassetingeneralsenseofthetermlikecar, landetc. Freesamplesofproductsareprovided. Incentives(otherthandiscount,rebate)intheformofcashorkindsuchascar,TV,computers,gold coin,mobile phone etc. Sponsoratriporprovidefreeticketsofeventfortherecipientandhis/herrelativesuponachieving certaintargets. Arjuna(FictionalCharacter):Krishna,whatifthepaymentsorbenefitsareprovidedareusedby owner/director/employee of the recipient entity or their relatives who in their individual capacity may not be carryingon business or exercising aprofession? Krishna(FictionalCharacter):Arjuna,Letusunderstanditwithahelpofthisexample- Let us assume that an entity A Ltd. is providing benefits and perquisites to employees, directors, consultants and relatives of an entity B Ltd. Here, A Ltd. will deduct tax under 194R in the name of B Ltd. as the person who are usingthe benefits are byvirtue of their relation withB Ltd.

  2. Further,BLtd.candeducttaxonbenefitsreceivedbyitsemployeesordirectorsundersection192.Further,BLtd.candeducttaxonbenefitsreceivedbyitsemployeesordirectorsundersection192. In case where the benefits are received by B Ltd.’s consultants, they can again deduct tax under section 194R but to remove the difficulty department has provided an alternative in which the original benefit provider may directlydeduct tax undersection 194R inthe case of aconsultant as arecipient. Butnowwhenwetalkaboutthebenefitsreceivedbytherelativethedepartmentissilentandhasonlymentioned thatbenefit provider shalldeduct tax in thename of the recipiententity. Arjuna (Fictional Character): Krishna, what are the cases where we do not need to deduct tax under section 194R? Krishna(FictionalCharacter):Arjuna,thecaseswheretaxdeductionisnotrequiredareasfollows: The deduction is not required to be made, if the value or aggregate of value of the benefit or perquisite providedorlikelytobe providedtotheresidentduring thefinancialyeardoes notexceedRs20,000/- Theresponsibilityoftaxdeductionalsodoesnotapplytoaperson,beinganIndividual/Hindu undividedfamily(HUF)deductor,whosetotalsales/grossreceipts/grossturnoverfrombusinessdoes notexceedonecrorerupees,orfromprofessiondoesnotexceedfiftylakhrupees,duringthefinancial yearimmediatelyprecedingthefinancialyear inwhichsuchbenefitorperquisite isprovidedbyhim. This section shall not apply if the benefit or perquisite is being provided to a Government entity, like Governmenthospital, not carrying onbusiness or profession. In case of the schemes. For example, where a seller offers 2 items free with purchase of 10 items. It is a case of benefit but department has removed such cases from the levy of tax to remove the difficulty in applyingthis section. IncasethebenefitorperquisiteistaxableunderSalaries. Arjuna(FictionalCharacter):Krishna,whatoneshouldlearnfromthis? Krishna (Fictional Character): Arjuna, we can understand one thing from the introduction of this section that government wants to make its provisions on income tax more stringent for persons, who till now used to earn benefits without paying taxes. Generally, this practice was followed in medical industry so the Income Tax Departmenthavespecificallymentionedexamplesquotingmedicalindustrypracticesinthecircularwhich makes it clear that the department will keep a close eye on the medical industry practices. Hence it is now important for a tax professional to look into the details of the transactions and report the applicability of TDS under194R.

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