Who is required to deduct TDS?
- Any person responsible for providing to a resident, any benefit or perquisite, arising from business and profession is liable to deduct tax u/s 194 R on such benefit or perquisite provided.
- However, No TDS is required to be deducted when deductor is an individual/HUF in business/profession with turnover in business/profession below 1 Cr or 50 Lakhs during the financial year immediately preceding the financial year in which such benefit or perquisite, is provided by such person.
Rate of TDS : 10%
Applicable from: 1st July 2022
Threshold limit : TDS u/s 194R is not required to be deducted if the value of the benefit or perquisite given does not exceed Rs 20,000 in a financial year.
Important Points:
- This section will not apply if the recipient is a non-resident.
- Section 194R covers situation where the benefit or perquisite is in cash or in kind or partly in cash or partly in kind.
- Section 194R covers the free samples given to customers.
- The valuation of benefits or perquisites would be based on fair market value of the same except-
- The benefit or perquisite provider has purchased the same before providing it to the recipient and in this case purchase price shall be considered as value of the same.
- The benefit or perquisite provider manufactures such items given as benefit or perquisite, then the price that it charges to its customers for such items shall be the value of the same.
- GST will not be included for the purposes of valuation of benefit/perquisite for TDS under section 194R.
- In case the products are given to Social Media Influencers for making audio or video to speak about product by Manufacturing Company then-
- If the said product is returned to the manufacturing company after using for the purpose of rendering service, then it will not be treated as a benefit or perquisite for the purposes of section 194R.
- If the product is retained then it will be in the nature of benefit or perquisite and tax is required to be deducted accordingly under section 194R.
- The threshold of twenty thousand rupees is with respect to the financial year 2022-23 shall be counted from 1st April, 2022. TDS shall not be deducted under section 194R for benefit or perquisite which has been provided on or before 30th June 2022.
