Guidelines on perquisites under section 194R (2) of the Income Tax Act

The Finance Act 2022 inserted a new section 194R in the Income-tax Act, 1961.

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

This deduction is not required to be made, if the value or aggregate of 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, 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, during the financial year immediately preceding the financial year in which such benefit or perquisite is provided by him.

Section 194R(2) of the Act authorises the Board to issue gu idelines, for removal of difficulties, with the approval of the Central Government. Accordingly, the Board, with the prior approval of the Central Government, issued the guidelines.

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