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Section 194R: New Section of TDS inserted by Finance Act 2022

SECTION 194R- DEDUCTION OF TAX ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS OR PROFESSION

 


In the Finance Act 2022, a new TDS section 194R, has been inserted in the Income Tax Act, and which has been made applicable w.e.f. 1.7.2022.

TDS @ 10% of the value of- Benefit or perquisites, whether given in Cash or Kind, to a Resident from Resident

Provided that a resident individual who is given such benefits or perquisites which are wholly in kind or partly in kind, is responsible to pay TDS on value of such benefits before releasing it.

Not required to deduct TDS if value of benefit or perquisite in a financial year does not exceed 20,000 rupees.

Person not required to deduct TDS under this section- Individual or HUF, whose total sales, gross receipts or turnover does not exceed 1 Cr rupees in case of business or 50 Lakhs rupees in case of profession, during the financial year immediately preceding the financial year.

Clarificatory Circular by CBDT

The Apex body CBDT has come up with a Clarificatory Circular No. 12 of 2022-Income Tax, dated 16.6.2022, containing clarificatory guidelines in the form of ‘Question-Answers’, on newly inserted provisions concerning applicability of TDS on Benefits or Perquisites, u/s 194R of the Income Tax Act. The CBDT Circular provides that:

1.      TDS u/s 194R is to be deducted @ 10%, w.e.f. 1.7.2022, irrespective of whether the Benefit or Perquisite is Taxable or Not in the hands of the Recipient. That is, taxability in hands of recipient does not matter.

2.      TDS u/s 194R is to be deducted on Purchase Value (Actual Cost Basis) of such Benefit or Perquisite, if such benefit or perquisite has been purchased before giving the same to recipient, and in other cases, on Fair Market Value of such Benefit or Perquisite.

3.      GST is to be Excluded from the Purchase Value or Fair Market Value of such Benefit or Perquisite, for the Purpose of TDS Deduction.

4.      TDS u/s 194R is to be deducted if the Aggregate Value of the Benefit or Perquisite is in excess of Rs. 20,000/-, in a Year, per Recipient.

5.      For FY 2022-23, the Value of Benefit or Perquisite given in the Period from 1.4.2022 to 30.6.2022, will be counted and considered for determining the threshold limit of Rs. 20,000 in a year, but TDS u/s 194R will not be deducted on such Benefits or Perquisites. TDS u/s 194R will be deducted only on those Benefits or Perquisites which are provided or given on or after 1.7.2022.

Click on the below link to read the full circular.

 https://www.incometaxindia.gov.in/communications/circular/circular-no-12-2022.pdf


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