Sec. 194R of income tax act has been inserted with effect from July 1, 2022. According to sec.194R of income tax act any person responsible for providing any perquisite or benefit pertaining to business/profession carried on by deductee, is responsible for deducting tax at source.
Further, this section is introduce to stop falsification or misreporting of income that individual receive through monetary or non-monetary perquisite or benefit.
1.Who is responsible for tax deduction under section 194R of income tax act?
According to sec.194R of income tax act any person(whether resident or non-resident) responsible for providing any perquisite or benefit pertaining to business/profession carried on by deductee, is responsible for deducting tax at source.
2.To whom is section 194R applicable or who is deductee ?
Section 194R of income tax act is applicable to resident individual. i.e. any resident individual receives any perquisite or benefit from a business or profession in cash kind or partially in cash or kind.
3. What is the threshold limit for deduction of tax u/s 194R of income tax act?
The provision of section 194R are not applicable in case of a resident where the value or aggregate of value of the benefit / perquisite provided to such resident during the financial year does not exceed ₹20,000.
In simple words provisions of section 194R is applicable if value of perquisite or benefit provided to resident is exceeds ₹20,000 during financial year.
4.What is the TDS rate in section 194R?
- The tax is deductible at the rate of 10% of the value (or aggregate of value) of such benefit or perquisite.
- Business or professional shall deduct TDS @ 10% if the monetary value of such perquisite is exceeds ₹20,000.
∗If however, the benefit/perquisite is wholly in kind (or partially in cash or kind but such part in cash is not sufficient to meet the liability of TDS in respect of whole of such benefit/perquisite). Then the deductor shall before releasing the benefit/perquisite, ensure that tax required to be deducted has been paid in respect of such benefit/perquisite.
5. At what time TDS is deductible u/s 194R of income tax act?
TDS is to be deducted at the time before releasing the benefit or perquisite to the resident person.
6. When does section 194R not apply?
Section 194R is not applicable in following situations:
- If there is no business relations then tax will not be deducted
- And if perquisite or benefit is provided by the employer to his employee than this section will not apply
- if recipient is non resident
7. TDS Certificate
The person who deduct TDS must pay tax at source on or before due date. And, the deductor shall issue quarterly TDS certificate to the deductee in form 16A.
8.TDS Return
The deductor is liable to deduct TDS under section 194R shall file quarterly TDS return in form 26Q..
Refer: https://taxandfinanceguide.com/tds-on-salary-u-s-192/ and https://taxandfinanceguide.com/tds-on-rent/
