194R Regulations Summary
  • The provider of any benefit or perquisite given to a dealer, supplier, influencers or similar partners resulting from a business or professional relationship.
  • Aggregate value or the benefit exceeds INR 20,000 in the financial year.
  • The Provider to deduct tax at the rate of 10 percent before providing such benefit or perquisite.
  • The aggregate annual threshold of Rs 20,000 is to be considered for the entire FY 2022-23 with effect from April 1.
  • However, TDS liability will trigger only on the benefit or perquisite provided on or after July 1, 2021.
  • Higher rate of 20% TDS applicable for dealers who do not have PAN or have filed their Tax returns.
  • TDS shall apply to all modes of providing benefit or perquisite, whether in cash or kind or partially in cash and kind.
  • It has been clarified that tax shall be deducted in the name of the dealer irrespective of the utilisation of such benefit/perquisite.
  • This would result in TDS credit and corresponding income as per Form 26AS in the name of the dealer.
  • Business conferences organised with the prime object of educating dealers/customers about new products, sales techniques and other similar business-related objectives have been excluded from the purview of TDS liability subject to certain conditions.
  • However, expenses on prior stays or overstay beyond the dates of business conferences continue to attract perquisite TDS (At fair value).
  • Certain exemptions apply in case of samples that are returned etc.
* Applicable where provider turnover is more than INR 50 L in the case of companies
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194 Resources
Summary Brief description Date Link
Circular No. 12 of 2022 Guidelines for removal of difficulties under sub-section (2) of section 194R of the Incometax Act, 1961 16 Jun 22 https://incometaxindia.gov.in/communications/circular/circular-no-12-2022.pdf
Discussion on implications of 194R regulations Dissecting the CBDT Circular, Section 194R: TDS on benefits and perquisites 28 Jun 22 https://www.ey.com/en_in/webcasts/2022/06/dissecting-the-cbdt-circular-section-194r-tds-on-benefits-and-perquisites
194R regulations deep dive A well documented discussion on various aspect of the regulation 1 Jul 22 https://incorpadvisory.in/blog/section-194r-take-a-dive-into-the-ocean-of-194r/
Circular No 18 of 2022 Additional Guidelines for removal of difficulties under sub-section (2) of section 194R of the Income-tax Act, 1961 13 Sep 22 https://incometaxindia.gov.in/communications/circular/circular-no-18-2022.pdf