What is date of applicability of section 194R?
The latest rule concerning the TDS is effective from the date July 1, 2022. The government specified the new TDS section 194R in the Income Tax Act in the Budget 2022-23.
What is the nature of payment covered under section 194R?
Any person provides any benefit or perquisite, whether converted in to money or not, arising from business or profession. his section has been mainly inserted to avoid misreporting of income that people are receiving in the form of any perks or other benefits in non-monetary form from the business or profession.
What is the TDS rate applicable on section 194R?
The TDS rate is applicable @10% if if the monetary value of such gift or perquisites exceeds INR 20,000 during the financial year of each recipient.
Read Also : Section 194Q – Tax Deducted at Source on the purchase of goods.
Who shall payer under section 194R?
If any business or profession is giving benefits or perquisites to any agent, channel partner, dealer, distributor, or any other person of an amount more than the specified amount during the financial year to one recipient then they are liable to deduct TDS under Section 194R.
However, it is not applicable to the Individual/HUF to deduct TDS if the total sales don’t exceed INR 1 crore in the case of business and INR 50 Lakh in the case of a profession in the immediately preceding financial year
What are the exceptions for section 194R ?
This section is not applicable to the employees who are receiving any benefits from their employers i.e. (if an Employer-employee relationship exists) then
it will be treated under Section 192.
If the recipient is a Non-resident then tax shall be deducted under Section 195.
If there is no business relationship then the tax will not be deducted.
What is the method for deduct of TDS from benefit or Perquisites ?
The liability can be discharged by any of the below options:
Payer either by grossing up the net amount or by paying the tax from his own pocket.
If the payee gives cash to the payer to meet the TDS liability and the deductor deposits the same.
If the payee has a credit balance, the payer can deduct TDS from that and pay the net amount after deducting the TDS from the payee.
Whether the benefits or perquisites provided before 01-07-2022 shall also be considered in the threshold limit of INR 20,000?
Yes, Section 194R is applicable from 01-07-2023. Still, for calculating the limit of INR 20,000 the benefits received from 01-04-2023 to 30-06-2023 should also be considered in calculating the threshold limit of INR 20,000.
Read Also : Senior Citizens do not have to file ITR
How is the price of benefits or perquisites to be calculated?
The price of benefits or perquisites is to be calculated on the basis of the fair market value of such products.
Whether sales discounts, cash discounts, and rebates are benefits or perquisites?
No, these discounts and rebates are being reduced from the sale price so these are not being treated as benefits or perquisites.
