The CBDT has issued guidelines on the applicability of TDS to non-salary perks.

The Central Board of Direct Taxes (CBDT) issued guidelines to resolve possible problems arising from the application of the recently enacted section 194R of the Income Tax Act, which requires withholding of 10% tax (TDS) on non-salary benefits or perquisites. From July 1, the new provision of the Finance Act 2022 will take effect.

The taxpayer must check the taxability of the amount in the recipient’s hands, according to the guidelines, and the nature of the item supplied as a benefit or perquisite is irrelevant. Also included in the ambit of Section 194R are capital assets supplied as a perk or perquisite.
It is made clear that the benefit or perquisite covered by Section 194R can be in cash, in kind, or a combination of the two. For putting TDS liability on the payer, CBDT applies the term “of whatever nature” categorically on benefit or perquisite.
Section 194R also applies to sellers who provide incentives to in the form of cash or kind, other than discount or rebates such as car, TV, computers, gold coin, mobile phone, sponsored trip, free ticket, or medical samples to medical practitioners practicing in the hospital.

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