CBDT points tips on TDS applicability on non-salary perquisites

The Central Board of Direct Taxes (CBDT) on Thursday issued tips looking for to deal with probably points emanating from utility of the newly launched part 194R of the Revenue Tax Act for withholding 10% tax (TDS) on advantages or perquisites from non-salary sources.

The brand new provision a part of the Finance Act 2022 will grow to be efficient from July 1.

Based on the rules, it isn’t vital for the payer/deductor to test the taxability of the sum within the arms of the payee earlier than deducting TDS by clearly distinguishing the ideas governing TDS underneath Part 195 from the TDS underneath Part 194R.

It’s made clear that the profit or perquisite coated underneath Part 194R may be both in money or in sort or partly in money and partly in sort. The character of asset given as profit or perquisite shouldn’t be related and even capital belongings given as profit or perquisite are coated throughout the scope of Part 194R. CBDT categorically makes use of the phrase ‘of no matter nature’ on profit or perquisite for fastening TDS legal responsibility on the payer.

Nonetheless, CBDT has offered a breather on gross sales low cost, money low cost and rebates allowed to buyer by excluding them from the purview of Part 194R as their inclusion would put the vendor into difficulties. Part 194R will apply to vendor giving incentives, apart from low cost or rebate, that are in money or sort e.g., automobile, TV, computer systems, gold coin, cell phone, sponsored journey, free ticket, drugs samples to medical practitioners.

“The rules have been issued in time contemplating the part is efficient from 1 July and seeks to offer readability on a number of fronts. Sure points, significantly applicability of withholding tax on reimbursement of OPE’s, advantages offered in circumstances of recipient not engaged in enterprise or career and many others. might open up a number of sensible points which taxpayers ought to brace themselves with,” stated Sudin Sabnis, Associate, Nangia Andersen LLP.

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