The Central Board of Direct Taxes under the Income Tax department has notified fresh guidelines in connection with the applicability of a new TDS provision related to receiving benefits in a business or profession. The tax board said that these perquisites may either be in cash, in-kind or partly in both of these two means. Finance Act 2022 inserted a new section 194R in the Income-tax Act, 1961, which was notified during the Budget speech of finance minister Nirmala Sitharaman earlier this year.
said the CBDT in its notice dated June 16, Thursday. The new provision will come into effect on July 1, which is next month.
The CBDT also said that the taxpayer is not required to check whether the amount of benefit or perquisite that he is providing would be taxable in the hands of the recipient under clause (iv) of section 28 of the Finance Act 2022.
The guidelines also mentioned that Section 194R shall apply to sellers giving incentives, apart from rebates or discounts, which include items in cash or kind. Some of these are cars, TV, computers, gold coin, mobile phones, sponsored trips to family, free tickets and free medical samples.