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TDS Changes admin July 7, 2022

TDS Changes

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Important Update

Income Tax (TDS) Changes w.e.f. 1st July 2022

A. Insertion of New Section 194R: 

TDS @ 10% on Benefits or Perquisites, arising out of Business or Profession exceeding Rs. 20,000/- in a year.

Examples of Perquisites are as follows:

Car, TV, computers, gold coin, mobile phone, sponsored trip, free ticket, leisure trips, loyalty rewards in cash (cash back)/prepaid vouchers/kind/in the form of discount on future purchases, company sponsored tours for entertainment, extended credit period on special offer, reimbursement for out-of-pocket expenses (for e.g. expenses paid to auditor/consultant where such invoices are not in name of company), incentives in cash or kind given to any director/employee/associate or consultant, medicine samples to medical practitioners. (these can be in cash or kind)

Examples of what shall not be treated as perquisites are as follows:

1. Dealer/Business Conference where it is held with the prime object to educate dealers/customers about any of the following or similar aspects:
a. new product being launched
b. discussion as to how the product is better than others
c. obtaining orders from dealers/customers
d. teaching sales techniques to dealers/customers
e. addressing queries of the dealers/customers
f. reconciliation of accounts with dealers/customers.
2. Trade Discounts, Cash Discounts, Rebates on MRP/Listed Price of Products or Services, additional quantity provided free of cost.
3.  Display items, Trainings, Special ERPs.


B. Insertion of New Section 194S:

TDS @ 1% on Purchase Consideration of Virtual Digital Asset

For Individuals & HUF total sales or gross receipts does not exceed rupees one crore, in case of business, or rupees fifty lakhs in case of profession, during the immediately preceding financial year, or, an individual or HUF, who does not have any income under the head business or profession and purchase of virtual digital asset amount exceeding 50,000/- in a year.

For Others purchase consideration for purchase of virtual digital asset amount exceeding 10,000/- in a year.
No deduction of tax shall be made under Section 194-I
For payment in the nature of lease rent or supplemental lease rent, as the case may be, made by a person (hereafter referred as ‘lessee’) to a person being a Unit located in International Financial Services Center (hereinafter the ‘lessor’) for lease of an aircraft subject to the following-

The lessor shall, -

i. Furnish a statement-cum-declaration in Form No. 1 to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction under section 80LA.
ii. Such statement-cum-declaration shall be furnished and verified in the manner specified in Form No.1, for each previous year relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction section 80LA.

The lessee shall, -

i. Not deduct tax on payment made or credited to lessor after the date of receipt of copy of statement- cum-declaration in Form No. 1 from the lessor; and
ii. Furnish the particulars of all the payments made to lessor on which tax has not been deducted

Note: The above relaxation shall be available to the lessor during the said previous years relevant to the ten consecutive assessment years. The lessee shall be liable to deduct tax on payment of lease rent for any other year.

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