Additional Guidelines for removal of difficulties under sub-section (2) of section 194R of the Income-tax Act, 1961
Section 194R introduced by Finance Act 2022 w-e-f 1-Jul-2022
1. TDS @10% to be deducted on the value / aggregate value of Benefit or Perquisite provided to a Resident during the financial year.
2. Tax to be deducted before providing such Benefit or Perquisite
3. Benefit or Perquisite may not be convertible into money
4. Benefit or Perquisite should arise from business / profession carried out by the Resident.
5. No TDS required if value or aggregate value of Benefit or Perquisite to Resident does not exceed Rs. 20,000 during the financial year
6. Responsibility of TDS does not apply to Individual or HUF providing the Benefit or Perquisite if Gross – Sales / Turnover / Receipts for the previous financial year
a. From Business does not exceed Rs. 1 crore
b. From Profession does not exceed Rs. 50 Lakh
CBDT Circular 18 of 2022 dated 13-Sep-22: Additional Guidelines for removal of difficulties under sub-section (2) of section 194R of the Income-tax Act, 1961
1. No TDS u/s 194R on One Time Loan settlement with Borrowers or Waiver of Loan by:
a. Public Financial Institution, b. Scheduled Bank, c. Co-operative Bank, d. Primary Cooperative Agricultural and Rural Development Bank, e. State Financial Corporation, f. State Industrial Investment Corporation, g. Deposit taking NBFC, h. Systemically Important (SI) Non-deposit taking NBFC, i. Housing Finance Company providing long term finance for construction or purchase of residential houses in India, j. Asset Reconstruction Companies.
2. No TDS u/s. 194R on Expense incurred by Pure Agent and reimbursed by recipient (would not be treated as Benefit or Perquisite), if;
a. Supplier acts as Pure Agent on behalf of recipient and makes payment to third party on authorisation of the recipient.
b. Payment made by Pure Agent on behalf of recipient to third party is separately indicated in the invoice issued by the Pure Agent to the recipient
c. Supplies procured by Pure Agent from third party are in addition to its own supplies
d. GST input credit is claimed by the recipient
3. No TDS u/s 194R on Out-of-pocket expenses included in the bill and Tax deducted u/s. 194J on entire amount of the bill including the Out-of-pocket expenses.
4. No TDS u/s. 194R on Benefit or Perquisite provided in a group activity if;
a. It is difficult to match the benefit or perquisite with each participant separately,
b. Such expense is not claimed as deductible expenditure from total income under Income Tax, by the person incurring such expense.
5. Depreciation on Car received as gift is available to the recipient, if;
a. TDS u/s. 194 R is deducted by the person giving the gift
b. Benefit value is included in the total income offered to tax by the recipient.
6. Section 194R is not applicable on benefit or perquisite provide by;
a. Organisation in the scope of The United Nations (Privileges and Immunity Act) 1947
b. International Organisation with income exempted as per specific act of parliament.
c. An Embassy, High Commission, Legation, Commission, Consulate and Trade representation of a foreign state
7. No TDS u/s. 194R on issue of Bonus or Right shares to all shareholders by a company in which the public are substantially interested.
Author Bio
