The Central Board of Direct Taxes (CBDT) on Thursday issued tips in search of to handle probably points emanating from software of the newly launched part 194R of the Income Tax Act for withholding 10% tax (TDS) on advantages or perquisites from non-salary sources.
The new provision a part of the Finance Act 2022 will develop into efficient from July 1.
According to the rules, it’s not needed for the payer/deductor to verify the taxability of the sum within the fingers of the payee earlier than deducting TDS by clearly distinguishing the rules governing TDS underneath Section 195 from the TDS underneath Section 194R.
It is made clear that the profit or perquisite coated underneath Section 194R could be both in money or in form or partly in money and partly in form. The nature of asset given as profit or perquisite will not be related and even capital property given as profit or perquisite are coated throughout the scope of Section 194R. CBDT categorically makes use of the phrase ‘of whatever nature’ on profit or perquisite for fastening TDS legal responsibility on the payer.
However, 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 Section 194R as their inclusion would put the vendor into difficulties. Section 194R will apply to vendor giving incentives, aside from low cost or rebate, that are in money or form e.g., automotive, TV, computer systems, gold coin, cell phone, sponsored journey, free ticket, medication samples to medical practitioners.
“The guidelines have been issued in time considering the section is effective from 1 July and seeks to provide clarity on multiple fronts. Certain aspects, particularly applicability of withholding tax on reimbursement of OPE’s, benefits provided in cases of recipient not engaged in business or profession etc. could open up a host of practical issues which taxpayers should brace themselves with,” stated Sudin Sabnis, Partner, Nangia Andersen LLP.
Source: www.financialexpress.com”