By Dr. V K Singhania
The CBDT has introduced some new provisions in order to keep a check on tax revenue leakage. Section 194R, and 194 S have been added to Finance Act 2022. These are applicable from 1st July 2022.
Basics of Section 194R
- The framework of the new Section 194R applicable from 01-07-2022
- What is envisaged within the meaning of benefit or perquisite?
- Who will be treated as the provider of benefit or perquisite?
Fundamental Issues in Section 194R
- Is taxability of benefit or perquisite under Section 28(iv) mandatory for tax deduction under Section 194R?
- Does Section 194R apply to monetary benefit or perquisite?
- How to determine the nexus of benefit or perquisite with business or profession of deductee?
- At what stage of delivery of benefit or perquisite, tax be deducted?
- How is the value of benefit or perquisite to be determined?
- Can the CBDT Circular be binding on issues that do not address the removal of difficulties but enlarge the scope of tax liability?
Practical issues in Section 194R
- Issues concerning computing the annual threshold limit of TDS of Rs. 20,000
- Issues concerning TDS where benefit or perquisite is provided in-kind
- Issues concerning reimbursement of business-related expenses
- Liability for TDS in case of promotional schemes run by a business entity and goods provided to social media influencers for publicity
- Liability for TDS in case of business conferences and similar events
- Impact of Section 194R on various businesses, including Pharma, FMCG
- Practical challenges in connection with deduction of tax under Section 194R
Any person paying to any resident, any sum by way of consideration for transfer of virtual digital assets (VDA) TDS should be deducted.
TDS on payments other than salary
- TDS under sections 192A, 194, 194C, 194-I, 194-IA, 194-IB,194J, 194K, 194M, 194N, 194-O, 194P, 194Q, 194 R, 194S and 195.
- Consequences of TDS defaults