Clarifications provided by Circular No 12

► Government protected from withholding u/s 196 of ITA. whether or not carrying on
S. 194R not applicable when benefit/perquisite provided to government entities not carrying on business
business (F AO 4) ► Whether principle can be extended to other entities not carrying on business(e.g.
charities)?

Guidelines on valuation of benefit or perquisite (FAO 5)

Value - FMV. except ► FMV not defined in Circular - S.2(22B) definfcion applicable to capital asset
► Purchase cost * If the provider has "purchased" the benefit/ perquisite
► Price to customers * If benefit/perquisite provided in the form of items manufactured by ► “Purchase" may include service/facllity as well
provider
► GST to be excluded even if ITC not available?
GST component to be excluded for determination of value

Free use of a product allowed to social media influenced AO 6)

► Whether principle can be extended to other similar cases in industry?
► Requires examination of facts of case ► What if a item is allowed to be used till the end of economic life and returned/scrapped ?
► No TDS if product like car. mobile, outfit, cosmetics, etc returned after use
► TDS applicable if product retained by recipient

Reimbursement of out of pocket expenses incurred in the course of rendering of service to client
(FAO 7)
► Whether benef it/perquisite if incurred for render ing of services to client?
► TDS applicable if invoice In name of service provider - whether paid directly or reimbursed by ► Overlap with FAO 30 of Circular No. 715
client ► Practical challenges in obtaining invoices in client's name
► TDS not applicable if invoice in name of client - whether paid directly or reimbursed by client

II 4) 25:39 / 1:43:32