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Section 194R – TDS on benefits or perquisite of business or profession

section 194R

In the Finance Bill 2022, a new TDS section 194R has been proposed with respect to TDS on benefit or perquisite of a business or profession. The said section will be effective w.e.f. 1st July 2022.

The said section focus on the point that as per clause (iv) of section 28 of the Act, the benefit or perquisite provided by the business or profession shall be taxable in the hands of the recipients. However, in many cases, such benefits or perquisites do not get reported by the recipients in their Income tax returns, leading to furnishing of incorrect particulars of income.

Therefore, section 194R is to be introduced which states that any person, responsible for providing a benefit or perquisite in respect of his business or profession, to a resident, shall ensure that while providing the benefit or perquisite, tax has been adequately deducted on the value of value of benefit or perquisite, at the rate of 1 percent. Also, where the benefit or perquisite has not been adequately in cash or partly in cash, then the responsibility to deduct the TDS shall be on the payer.

The value at which the TDS to be deducted shall be Rs. 20 thousand during the financial year. The said provisions of the TDS shall not be applied on the following persons:-

a. In case of business, whose total sales, gross receipts or turnover does not exceed Rs. 1 Crore;


b. in case of profession, whose gross receipt does not exceed Rs. 50 lakhs

during the financial year in which such benefit or perquisite is provided.


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