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Doctors, Social Media Influencers Will Now Have To Pay TDS On Freebies From July 1; All You Need To Know
Writer: Tashafi Nazir
For most people, journalism sounds hectic and chaotic. For her, it's a passion she has been chasing for years. With an extensive media background, Tashafi believes in putting efforts on presenting a simple incident in the most interesting way.
India, 21 Jun 2022 9:55 AM GMT
Editor : Shiva Chaudhary |
A post-graduate in Journalism and Mass Communication with relevant skills, specialising in content editing & writing. I believe in the precise dissemination of information based on facts to the public.
Creatives : Tashafi Nazir
For most people, journalism sounds hectic and chaotic. For her, it's a passion she has been chasing for years. With an extensive media background, Tashafi believes in putting efforts on presenting a simple incident in the most interesting way.
The Central Board of Direct Taxes (CBDT) has stated that the taxpayer needs to check on the sum taxability in the hands of the recipient, and the provider of the benefit or the perquisite can directly deduct the tax under Section 194R.
Tax Deducted at Source (TDS) on benefits received from business for sales promotion will be applicable to doctors and social media influencers from July 1, 2022.
In a notification, the Central Board of Direct Taxes (CBDT) has stated that the taxpayer needs to check on the sum taxability in the hands of the recipient, and the provider of the benefit or the perquisite can directly deduct the tax under Section 194R.
It requires TDS at 10 per cent for any individual providing benefits exceeding ₹20,000 in a year to a resident, NDTV reported.
Further, CBDT has clarified that the nature of asset given as benefit or perquisite will not be relevant for calculation, and will cover capital assets, given as benefit or perquisites within the ambit of Section 194R, Outlook reported.
Benefits and Perquisite
Kamlesh C Varshney, Joint Secretary in the Finance Ministry, explained the benefits, including free medicine samples received by medicos, foreign flight tickets or free Indian Premier League (IPL) tickets during business.
He emphasised that these should be disclosed while filing the income tax return. In addition, it shouldn't be avoided based on the fact these items are not being sold.
Section 194R will also apply to the seller giving incentives, other than discount or rebate, which are in cash or kind, like TV, computers, cars, gold coins and mobile phones.
Application Of TDS On Working Doctors
CBDT clarifies that if doctors receive free samples of medicines while employed, Section 194R will apply to the distribution of free samples to the hospital. The hospital, as an employer, could consider such samples as taxable perquisite for employed doctors and deduct tax accordingly. In such cases, the threshold of ₹20,000 has to be seen with respect to the hospital.
For doctors working as consultants and receiving free samples, TDS would ideally apply to the hospital first, which would require deducting tax under Section 194R regarding consultant doctors.
Section 194R will not be applicable if the benefit or perquisite is provided to a government entity, such as a hospital, not carrying on business or profession.
CBDT also announced a breather on sales discount, cash discount and rebates allowed to a customer by excluding them from the purview of Section 194R. It stated that their inclusion would put the seller into problems.
Further, if benefits like cell phones are returned to the manufacturing company after using them for rendering service, they will not come under the purview of the new provision.
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