FAQ on section 194R of the Income tax Act, 1961

The Central Board of Direct Taxes vide circular dated 16th June, 2022 has issued FAQ on section 194R of the Income tax Act, 1961. The new section mandates a person, who is responsible for providing any benefit or perquisite to a resident, to deduct tax at source at 10% of the value or aggregate of value of such benefit or perquisite, before providing such benefit or perquisite. The benefit or perquisite may or may not be convertible into money but should arise either from carrying out of business, or from exercising a profession, by such resident.

It is clarified that the deductor is not required to check whether the amount of benefit or perquisite that he is providing would be taxable in the hands of the recipient. The asset given as benefit or perquisite may be capital asset in general sense of the term like car, land etc.