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    The circular provides clarifications on withholding tax under section 194R in 3 key areas: 1) Section 194R applies to any benefit or perquisite provided, regardless of whether it is taxable or not. 2) Section 194R also applies to monetary benefits and benefits provided in the form of capital assets. 3) Withholding is to be done on the recipient entity even if the benefit is used by others associated with the entity, and there is an option to deduct directly in the name of the recipient.

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    The circular provides clarifications on withholding tax under section 194R in 3 key areas: 1) Section 194R applies to any benefit or perquisite provided, regardless of whether it is taxable or not. 2) Section 194R also applies to monetary benefits and benefits provided in the form of capital assets. 3) Withholding is to be done on the recipient entity even if the benefit is used by others associated with the entity, and there is an option to deduct directly in the name of the recipient.

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    9 views2 pages

    2 Ocr

    Uploaded by

    Abhishek Gupta
    The circular provides clarifications on withholding tax under section 194R in 3 key areas: 1) Section 194R applies to any benefit or perquisite provided, regardless of whether it is taxable or not. 2) Section 194R also applies to monetary benefits and benefits provided in the form of capital assets. 3) Withholding is to be done on the recipient entity even if the benefit is used by others associated with the entity, and there is an option to deduct directly in the name of the recipient.

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    of 2

    Clarifications provided by Circular No 12

    Ravikant Kamath

    Clarification Illustrative issues

    Withholding u/s 194R applies on benefit or perquisite provided, regardless of :*


    ► chargeable to tax u/s 28(iv)/ 41( 1) or other provisions of IT A
    ► whether it is chargeable to tax or not ► Conflict with express language of s. 194R. intent as per Exp Memo and FM Speech

    Oistinct from s.195 and comparableto S.196D/PILC0M ratio(FAO 1)

    S.194R also applies to.monetary benefits ► Conflict with Mahindra 8 Mahindra (404 .TR 1) ► Proviso to S. 194R supports legislative intent to cover cash benefits (FAO 2)

    ► Distinction between benefit received in form of capital asset vs. benefit received in course of
    S. 194R also applies to benefit in the form of a capital asset (FAO 3)
    acquisition of capital asset

    194R not applicable to sales discount, cash discount and rebates - f inaneial or quantitative
    ► Free medicine samples - whose benef it/perquisrte?
    But clarification not applicabieto other benefits like car. TV. computers, gold coin, mobile phone, foreign trip, free ticket for event, free medicine samples (FAO 4)

    Withholding u/s 194R in the name of the recipient entity even if the benefit is "used” by owner/
    director/ employee or relative
    ► Practical challenges of dual TDS obligation
    Threshold of INR 20.000 qua recipient entity

    Option to deduct directly in name of recipient consultant (FAO 4)

    20:25 / 1:43:32 Q

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