The Income Tax Department has announced that doctors, affected and other such people who have received free goods from companies from July 1 this year will have to pay tax for receiving them. The Central Board of Direct Taxes has notified in its guidelines issued for these new rules that the beneficiaries will have to pay TDS at the rate of 10 percent under it. new tax rules, The tax board said that these perquisites can be either in cash, in kind or partly in both these modes. A new section 194R was inserted in the Finance Act 2022 Income tax Act, 1961, which was notified during the budget speech of Finance Minister Nirmala Sitharaman earlier this year.
“The new clause mandates a person who is liable to provide any benefit or perquisite to a resident, before providing such benefit or perquisite, 10 per cent of the value or total value of such benefit or perquisite But to deduct tax at source, the CBDT said in its notice dated June 16.
“The proposed new clause provides that the person responsible for providing any profit or perquisite to a resident, whether convertible into money or not, arising out of business or the practice of profession by such resident, such profit or perquisite before granting it, as the case may be, to such resident, that tax has been deducted at the rate of ten per cent in respect of such profit or pre-requisite. of the value or total value of such profit or perquisite,” section reads.
Under the new rule, social media influencers will have to pay and maintain 10 per cent TDS on receiving products like cars, mobiles, apparel, cosmetics etc. However, if the product is returned to the company after using the services, it will not be covered under section 194R.
The CBDT further said that Section 194R shall apply to the distribution of free samples by a company to a doctor who is an employee of a hospital. Tax will be deducted by the company in the hands of the hospital as profit/perquisite is provided to the doctor being an employee of the hospital.
The guidelines also mentioned that section 194R would be applicable to a seller offering an incentive other than a discount or discount, which includes items in cash or in kind. Some of these are cars, TVs, computers, gold coins, mobile phones, family sponsored trips, free tickets and free medical samples.
This deduction is not required to be made if the value or aggregate value of benefits or perquisites provided to the resident during the financial year does not exceed Rs 20,000, clarified the CBDT.
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