business-northeast-logo

New TDS rule to be levied upon influencers, doctors from July 1

BNE News Desk


Spread the love

Guwahati: TDS will soon be levied on social media influencers and doctors who get freebies. From July 1, social media influencers and doctors will be subject to Tax Deducted at Source (TDS) on benefits received from businesses for sales promotion.


The Central Board of Direct Taxes (CBDT) has issued recommendations on the new provision's application.

TDS will not be charged to the product if they return the gadget to the firm once the service is completed, according to the Central Board of Direct Taxes (CBDT) standards.

TDS

By incorporating a new section, 194R, into the Income Tax Act of 1961, the Union Budget included a provision for TDS on such income to combat tax revenue leakage.

TDS of 10% is required for any individual delivering a benefit to a resident in excess of Rs. 20,000 per year.

The benefits, according to Kamlesh C Varshney, Joint Secretary in the Finance Ministry, include free drug samples for physicians, overseas airline tickets, or free Indian Premier League (IPL) tickets in the course of business, among other things.

Mr. Varshney emphasised that they should be revealed when submitting an income tax return and that they should not be avoided because these products are not sold.

CBDT allows taxpayers an opportunity to file application for settlement –  ThePrint –

Section 194R will also apply to sellers that offer incentives other than a discount or refund in cash or kind, such as a car, television, computer, gold coins, or mobile phones.

"Whether the product offered for social media sales promotion activity is useful or perquisite will depend on the details of the situation." "If a benefit or prerequisite is a product such as a car, mobile phone, outfit, cosmetics, etc., and the product is returned to the manufacturing company after being used for the purpose of rendering service, it will not be treated as a benefit or prerequisite for the purposes of section 194R of the Act (the TDS provision)," the CBDT stated.

The CBDT specifies that if doctors get free samples of drugs while working in a hospital, Section 194R applies to the provision of free samples to the hospital. As an employer, the hospital may classify such samples as taxable perquisites for workers and deduct tax under Section 192. In such circumstances, the 20,000 barriers must be considered in relation to the hospital.

For doctors who act as consultants for a hospital and get free samples, TDS should be applied to the hospital first, which would necessitate deducting tax under Section 194R for consultant doctors.

It has also declared a reprieve on sales discounts, cash discounts, and rebates provided to customers by exempting them from Section 194R, claiming that their inclusion would cause problems for the seller.

Furthermore, if perks such as mobile phones are returned to the manufacturer after being used for the purpose of performing service (as in the case of social media influencers), they will be exempt from the new clause.

Also Read: https://www.business-northeast.com/net-direct-tax-collections-for-f-y-2022-23-continue-to-grow-at-a-robust-pace/

BNE News Desk