TDS @ 10% on the benefit or perquisite paid to a resident businessman or professional arising from its business or profession

The Finance Act, 2022 had inserted a new section 194R to the Income Tax Act, 1961 providing for deduction of tax at source (TDS) @ 10% on the benefit or perquisite paid to a resident businessman or professional arising from its business or profession. Section 194R is applicable from July 1, 2022.

Section 194R(1):- Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, by such resident, shall before providing such benefit or perquisite, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit or perquisite at the rate of ten percent of the value or aggregate of value of such benefit or perquisite. 

Provided that in case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind, but such part of cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite. 

Provided further that the provisions of this section shall not apply in case of resident where the aggregate value of the benefit or perquisite provided or likely to be provided to such resident during the financial year does not exceed twenty thousand rupees. 

Provided also that the provision of this section shall not apply to individual or HUF whose gross receipts or turnover does not exceed one crore rupees for business or fifty lakhs rupees for profession during the financial year immediately preceding the financial year in which such benefit or perquisite is provided by such person.

Whether sales discount, cash discount and rebates are covered under benefit or perquisite? – The answer is No, both the discounts and rebates are not covered under the benefit or perquisite, except the nature provided below:  

a) any incentive is given in form of car, TV, computers, etc. 

b) any person sponsors a trip for his/her recipient and relative upon achieving certain target. 

c) providing free ticket for an event.

The benefit or perquisite given as capital asset will be taxable in the hands of recipient as benefit or perquisite.

Profession Tax on Salary & Wages; effective from April 01, 2022

 Finance department of Gujarat vide notification no GHN-35-PFT-2022-S.3(2)(10)-TH dated 08th April 2022 revised profession tax slab for salary and wage earners. According to this notification there will no profession tax on salary & wages up to Rs. 12000/- per month. This notification will be effective from April 01, 2022.

 

Sr. No.	Class of Persons	Rate of Tax per Month
1	A)   Salary & wages earners of the state government, Central Government, Panchayats, Public Sector Undertakings of the State & Central Government and Grant-In-Aids institutions whose monthly salaries or wages are
	i)                    Up to Rs 12,000/-	Zero
	ii)                   More than 12,000/-	Rs. 200/-
	B)    Salary & wages earners other than those mentioned in sub-entry (A) above, whose institutions whose monthly salaries or wages are
	i)                    Up to Rs 12,000/-	Zero
	ii)                   More than 12,000/-	Rs. 200/-

 

Explanation I: Where any salary or wages are payable according to any period other than a month, the monthly salary or wages shall, for the purpose of this entry, be reckoned on the basis of the actual amount of salary or wages paid or payable for a month.

Explanation II: Where a person ceases to be a salary or wages earner before the end of any month, his liability to pay the tax for that month shall be proportionately reduced.

Source: Gujarat Professional Tax rates on Salary and Wages