Kamlesh C. Varshani, Joint Secretary, Ministry of Finance, said that such benefits and paragraphs are always taxable, whether received in income and cash or in kind.
Budget 2022-23 Provision of withholding tax (TDS) on such national income has been introduced to prevent tax revenue leakage.
A new section of the IT Act, 194R, has been introduced in the budget, which requires that at the rate of 10 per cent withholding tax be levied by any person, if a resident exceeds Rs. This type of resident business or profession.
The new provision will be effective from July 1.
“This (benefits and perquisites) is an area where no one pays taxes despite having business and career benefits and perquisites … there is definitely a loophole and so this section 194R. Whatever the doubt, we are going. Before 1 July. To clarify the practical difficulties, “said Version Industry Chamber while talking to members of Assocham.
He said benefits like free medicine samples obtained by doctors, or free IPL tickets, foreign airline tickets obtained during business or occupation should be disclosed in income and income tax returns.
Giving an example, Version says that if a doctor receives a free sample, it should be shown as a benefit or advantage and that it is income, regardless of whether the pharma company is using it as a sales promotion.
He said the company could claim deductions for such sales promotion expenses, but that promotion would be a taxable income in the hands of the recipient. “Therefore you have to deduct TDS”.
Emphasizing that 194R applies to free samples obtained by physicians, Version said that the taxability of such benefits cannot be based on the fact that since free samples are not being sold, it is not revenue. “Free samples have a value,” he said.