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
Discharge of TDS liability under Section 194R
|
Type of payment |
Who will pay | Due date of payment | Proof of payment | Amount on which tax to be deducted |
| Cash | Payer | 7th of the next month | TDS Certificate | Cash given |
| Kind or partly in kind and partly in cash | Recipient
OR |
Prior to receipt from payer | Advance tax challan | Fair Market Value of benefit/perquisite |
| Payer | 7th of the next month | TDS Certificate | Fair Market Value of benefit/perquisite INCLUDING the amount of TDS paid |
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
|
Payment type |
Whether perquisite or not |
| Capital assets such as car, land, etc. | YES |
| Sales discount/Cash discount/Rebates to customers | NO |
| Free Samples | YES |
| Offering more items at the price of fewer items | NO |
| Incentives such as car, TV, phone, gold | YES |
| Sponsoring vacations for recipient or his/her relatives | YES |
| Providing free tickets to events | YES |
| Medicine samples free to medical practioneers | YES |
| Social media influencer if they retain the product | YES |
| Social media influence if the return the product | NO |
| Out of pocket expenses incurred by service provider with invoice in name of service RECIPIENT | NO |
| Out of pocket expenses incurred by service provider with invoice in name of service PROVIDER | YES |
| All Dealer GENERAL conferences to educate dealers/customers for new products, teaching sales techniques, addressing queries, reconciliation of accounts, etc. | NO |
| Dealer conference for specific participants selected on the basis of achievement of targets, etc. | YES |
| Leisure component of general dealer conferences | YES |
| Expenses of accompanying family at general dealer conferences | YES |
| Expenses of prior/subsequent stay of participants at general dealer conferences | YES |
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