Section 194R requires a person, who is responsible for providing any benefit or perquisite to a resident to deduct tax at source 10% wef 1.07.2022 of the value or aggregate of value of such benefit or perquisite before providing such benefit or perquisite in cash or in kind. The recent Income tax Department circular contains the cases where it has clarified the applicability of TDS under 194R.
TDS under 194 R would be applicable in the following cases:
1 Any asset given as benefit or perquisite that may be capital asset in general sense of the term like car, land, building, Shares etc.
2.Free samples or products are provided as free samples to any resident
3.Incentives (other than discount rebate) in the form of cash or kind such as car, TV, computers, gold coin, silver coin, mobile phone, Laptop, Hard drives, gifts etc.
4,Sponsor a trip or provide free tickets of event for the recipient and his/her relatives upon achieving certain targets
Cases where tax deduction is not required are as follows:-
1-The deduction is not required to be made, if the value or aggregate of value of the benefit or perquisite provided or likely to be provided to the resident during the financial year does not exceed Rs 20,000/-
2.The responsibility of tax deduction also does not apply to a per-son, being an Individual/Hindu undivided family (HLTF) deduct or, whose total sales / gross receipts / gross turnover from business does not exceed one crore rupees, or from profession does not exceed fifty lakh rupees, during the financial year immediately preceding the financial year in which such benefit or perquisite is provided by him.