Income Tax department New TDS Rules: Central Board of Direct Taxes (CBDT) gave guidelines on new TDS arrangements
New TDS deduction rules: The Central Board of Direct Taxes (CBDT) has issued guidelines on the applicability of new TDS provisions which come into effect from July 1, regarding benefits received in a business or profession and said that such perquisites can either be in cash or kind or partly in both of these forms.
Tax Deducted at Source (TDS), From July 1: If you are a doctor or social media influencer, then you will have to follow the new income tax rule which comes into effect next month and makes a 10 per cent tax deducted at source (TDS) mandatory on the freebies received from sales promotions.
The Central Board of Direct Taxes (CBDT) last week issued guidelines on the applicability of new TDS provisions regarding benefits received in a business or profession and said that such perquisites can either be in cash or kind or partly in both of these forms. It said that the payer/deductor need not check the taxability of the sum in the hands of the recipient, and the nature of the asset given as benefit or perquisite is not relevant. Even capital assets given as benefit or perquisite are covered within the scope of Section 194R.
Section 194R shall apply to sellers giving incentives, other than discounts or rebates, which are in cash or kind e.g., car, TV, computers, gold coin, mobile phone, sponsored trips, free tickets, medicine samples to medical practitioners.
The guidelines explain the circumstances in which the new TDS provision which kicks in from July 1 will apply. This new TDS provision was introduced in Budget 2022-23 to broaden the tax base and ensure that those beneficiaries of such type of sales promotion expenditure by businesses, report it in their tax returns and pay tax on what the benefit is worth.
A new section, Section 194R, in the I-T Act was brought in which requires deduction of tax at source at the rate of 10 per cent by any person, providing any benefit or perquisite exceeding Rs 20,000 in a year to a resident, arising from the business or profession of such resident.