TDS on perquisites arising in business or profession:

TDS on perquisites arising in business or profession:
Spread the love
  1. Sec 194R has been introduced in Finance Act 2022 and made applicable from 1st July, 2022.
  2. It seeks to deduct tax at source (TDS) in case a person provides any benefit or perquisite in kind to a resident at the time of execution of a business transaction.
  3. It is important to note that this TDS arises only in the course of a business transaction. Salary perquisite is not covered by this provision.
  4. Example: Freebies to doctors, personal benefits such as foreign tours to professionals in lieu of compensation, etc.
  5. The rate of TDS is 10%.
  6. No TDS would be applicable in case of benefit/perks per person is not more than 20,000 in a Financial Year and for calculating Aggregate limit of Rs. 20,000 financial year is to be considered as a whole and not period after 01/07/2022.
  7. No TDS is to be deducted when deductor is an Individual/HUF in business/professional with turnover/receipts in business/professional below Rs.1 Crore / Rs.50 Lakhs.
  8. Point to ponder: whether Sec 194R would get attracted in the case of free samples?

Team – Intellex Strategic Consulting Pvt Ltd,,,


Leave a Reply

Your email address will not be published. Required fields are marked *