CBDT has issued a new guideline regarding TDS provision. As per the guidelines issued by the department, such benefits can be either in cash or kind or partly in both the forms.
Among other details, the Central Board of Direct Taxes (CBDT) also said that those who are paying TDS or else the deductor need not check the taxation of the recipient. Also the nature of property given as profit or perquisite will not be relevant.
According to the new guideline, even capital assets given as profits are covered under section 194R. Further, section ‘194R’ shall also apply to those sellers who give exemption. This discount can be in the form of cash or items like car, TV, computer, gold coin, mobile phone, free ticket etc.
The new provision will come into effect from July 1, 2022. The provision of TDS at source of such income was proposed in the budget for the financial year 2022-23 to prevent loss of tax revenue. Budget 2022-23 has brought a new clause in the IT Act – 194R. Based on this, this guideline has been issued.
Further, the CBDT clarified that Section 194R would also be applicable to doctors taking samples free of cost in a hospital. As an employee the hospital may treat such samples as taxable perquisite to the employees. On this basis, tax can be deducted under section 192.
Whereas for doctors working as consultants in a hospital and receiving free samples, TDS will be applicable on the hospital first. This would require deduction of tax under section 194R in respect of consultant doctors.