CBDT Issues Revised Guidelines on TDS on Perquisites

· New section mandates a person, who is responsible for providing any benefit or perquisite to a resident, to deduct tax at source @ 10% of the value or aggregate of value of such benefit or perquisite, before providing such benefit or perquisite.

· Tax deduction also does not apply to a person, being an Individual/Hindu undivided family (HUF) deductor, whose total sales / gross receipts / gross turnover from business does not exceed one crore rupees, or from profession does not exceed fifty lakh rupees

[Circular No. 12 of 2022 dated 16 June 2022]

The Central Board of Direct Taxes (CBDT) has issued revised guidelines on the issue of TDS on perquisites under section 194R of the Income Tax Act, 1961.

The Budget brought in a new section, 194R in the I-T Act 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.

In line with CBDT’s commitment to reduce taxpayer grievances, revised Instruction for constitution & functioning of Local Committees to deal with taxpayer grievances arising out of high-pitched assessments was issued.

The new section mandates a person, who is responsible for providing any benefit or perquisite to a resident, to deduct tax at source @ IO% of the value or aggregate of the value of such benefit or perquisite, before providing such benefit or perquisite. The benefit or perquisite may or may not be convertible into money but should arise either from carrying out of business or from exercising a profession, by such resident.

A circular issued by the Board on Thursday stated that “This deduction is not required to be made if the value or aggregate of the value of the benefit or perquisite provided or likely to be provided to the resident during the financial year does not exceed twenty thousand rupees. The responsibility of tax deduction also does not apply to a person, be ing an Individual/Hindu undivided family (HUF) deductor, whose total sales / gross receipts / gross turnover from business does not exceed one crore rupees, or from profession does not exceed fifty lakh rupees, during the financial year immediately preceding the financial year in which such benefit or perquisite is provided by him.”

“Sub-section (2) of section 194R of the Act authorises the Board to issue guidelines, for removal of difficulties, with the approval of the Central Government. These guidelines are required to be laid before each House of Parliament and are binding on the income-tax authorities and the person providing the benefit or perquisite,” the CBDT circular said.