Income Tax - Withholding Tax on Benefits or Perquisite under section 194R

Prepared On:
02/08/22


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What is Section 194R?

For whom it is Applicable?

Exemptions

When?

Other points to be noted

Time Limit Form to be filed Certificate to be issued Clarification required From Govt
TDS to be deducted and deposited within 7 days after end of the month Form 26Q to be filed by TDS deductor TDS deductor shall issue certificate in form 16A on quarterly basis No Clarity on the meaning to be assigned For value of benefit or perquisite

TDS u/s 194R will apply on.

FAQ's.

1. Whether sales discount, cash discount and rebates are benefit or perquisite?

Ans. No, But for following benefits TDS is to be deducted

2.How is the valuation of benefit/perquisite required to be carried out?

The valuation would be based on fair market value of the benefit or perquisite except in following cases:-

Nature Valuation
Purchased the Benefit/perquisite before providing to recipient Purchase price
Manufactures Such Benefit/Perquisite Price charged to customers for such items

Whether GST is to be considered while computing value under 194R ?

Ans. No

3.Reimbursement of expenses Incurred by Service Provider?

Incurred(Invoice) in the name of? 194R applicable or not?
Recipient Applicable
Benefit provider Not Applicable

4.How Tax has to be deducted?

Ans. Two options have been provided by government

5.How the limit of 20000 is to be computed for FY 22-23

Incurred Between April to June 22 Incurred After July 1st 2022 Aggregate value of benefit or perquisite Section 194R applicable? Amount on which tax to be deducted?
15000 0 15000 No 0
10000 15000 25000 Yes 15000
35000 0 35000 No 0

Disclaimer:

“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of situation.”