Tax Update: The new rule of TDS will be applicable from July 1, you may have to pay more tax

Tax Update: From July 1 this year, the new rule of TDS is being implemented. After this, you may have to pay more TDS. This year, Finance Minister Nirmala Sitharaman had made a provision to add a new section 194R in the Income Tax Act in the budget. Under this, if perks of Rs 20,000 or more are received in a year, then 10 percent TDS will have to be paid to them. The new provision is going to come into effect from July 1.

Before the implementation of this provision, the Finance Ministry will clear the confusion related to it. So that people can know on which perks they have to pay tax now. Kamlesh C Varshney, Joint Secretary, Ministry of Finance, said such facilities and perks are a kind of income and are always taxable, whether in cash or in kind.

Varshney, while interacting with the members of industry chamber ASSOCHAM, said, “This (amenities and perks) is one such aspect where no tax was being paid in spite of getting facilities and perks in the course of business and profession. There is definitely a flaw here. Therefore this section 194R has been added. If there is any doubt, we will clear it before July 1.

Example of doctors

He said there are perks such as free drug samples or free IPL tickets to doctors, and tickets for foreign travel in the course of business or profession, which should be disclosed in the income tax return.

Giving example, Varshney said that if a doctor is getting free drug samples, it should be shown as profit or facilities and it is income. Even if the pharma company is using it to increase sales.

Also, Read This: 7th Pay Commission: Central employees will get 18 months’ arrears, Rs 1.50 lakh will come in the account!

Tax Update: Companies can take a deduction on expenses incurred on promotion

He said that the company can claim a deduction for such expenditure on sales promotion, but this promotion will be added to the taxable income of the person who is getting it. Hence, “TDS has to be deducted.”