The document provides an overview of India's Faceless Assessment Scheme. Key points include:
1. The scheme aims to make the tax assessment process faceless, paperless, and anonymous through the use of technology.
2. Assessments will be conducted by assessment units organized under National and Regional E-Assessment Centers, removing direct interaction between taxpayers and individual tax officers.
3. Most income tax cases will be eligible for faceless assessment, except for certain sensitive cases involving serious tax evasion.
4. The document outlines the legal provisions, organizational structure, and step-by-step procedures for conducting assessments under the new faceless system.
The document outlines the various finance and accounting outsourcing services provided by SBC such as accounts payable, accounts receivable, bookkeeping, payroll processing, tax preparation and filing, audit assistance, and virtual CFO services. It also details additional services including business process outsourcing, business makeovers, legal services, and virtual CFO services. SBC aims to help clients streamline their finance functions, ensure compliance, and gain insights for improved decision making.
Steadfast Consulting provides accounts receivable outsourcing services to help organizations improve cash flow. Their services include billing, collections, payment processing, and accounts receivable reporting. Outsourcing accounts receivable to Steadfast allows companies to focus on core business activities while Steadfast handles the labor-intensive back office work. Steadfast has experts that provide tailored accounts receivable solutions and work 24/7 to handle changing workloads.
This document provides an overview of equity share valuation requirements under different statutes in India. It discusses the purpose of equity share valuation for various business decisions and events. The key statutes that require equity share valuation are the Companies Act 2013, Income Tax Act 1961, and Foreign Exchange Management Act 1999. Registered valuers, merchant bankers, and chartered accountants are authorized to conduct valuations depending on the statute. The document also outlines the valuation requirements and purposes under the different statutes. It introduces Steadfast Business Consulting as a firm that can assist with valuation reports and determining fair equity values.
This document discusses equity share valuation under different statutes. It provides an overview of the purpose of equity share valuation and who can perform valuations. It then discusses valuation requirements and triggers under the key statutes - the Companies Act 2013, Income Tax Act 1961, and Foreign Exchange Management Act 1999. Finally, it covers common methods of valuation including discounted cash flow, capitalization of earnings, and asset-based approaches.
The document discusses transfer pricing and international taxation services provided by SBC, including transfer pricing documentation, dispute resolution, advisory services, and compliance filings. It outlines SBC's team of experienced professionals and their expertise in transfer pricing. Key services mentioned include transfer pricing planning, documentation, controversy resolution, risk management, and integrated tax planning. Compliance requirements such as documentation, accountant's reports, master files, and country-by-country reporting are also summarized.
This document summarizes the master file and country-by-country reporting requirements in India. It outlines the applicability, contents, forms, and due dates for master file reporting, including differences from OECD requirements. It also summarizes the applicability, contents in line with the BEPS Action 13 template, and forms and timelines for country-by-country reporting. Finally, it provides the penalties for non-compliance with master file and country-by-country reporting in India.
The document discusses emerging trends and recent judicial precedents related to transfer pricing. It provides an overview of key concepts in transfer pricing such as the arm's length principle, applicable transactions, associated enterprises, international transactions, specified domestic transactions, prescribed transfer pricing methods including comparable uncontrolled price method, resale price method, cost plus method, and profit split method. It also discusses comparables and factors affecting comparability.
The document provides an overview of India's Faceless Assessment Scheme. Key points include:
1. The scheme aims to make the tax assessment process faceless, paperless, and anonymous through the use of technology.
2. Assessments will be conducted by assessment units organized under National and Regional E-Assessment Centers, removing direct interaction between taxpayers and individual tax officers.
3. Most income tax cases will be eligible for faceless assessment, except for certain sensitive cases involving serious tax evasion.
4. The document outlines the legal provisions, organizational structure, and step-by-step procedures for conducting assessments under the new faceless system.
The document outlines the various finance and accounting outsourcing services provided by SBC such as accounts payable, accounts receivable, bookkeeping, payroll processing, tax preparation and filing, audit assistance, and virtual CFO services. It also details additional services including business process outsourcing, business makeovers, legal services, and virtual CFO services. SBC aims to help clients streamline their finance functions, ensure compliance, and gain insights for improved decision making.
Steadfast Consulting provides accounts receivable outsourcing services to help organizations improve cash flow. Their services include billing, collections, payment processing, and accounts receivable reporting. Outsourcing accounts receivable to Steadfast allows companies to focus on core business activities while Steadfast handles the labor-intensive back office work. Steadfast has experts that provide tailored accounts receivable solutions and work 24/7 to handle changing workloads.
This document provides an overview of equity share valuation requirements under different statutes in India. It discusses the purpose of equity share valuation for various business decisions and events. The key statutes that require equity share valuation are the Companies Act 2013, Income Tax Act 1961, and Foreign Exchange Management Act 1999. Registered valuers, merchant bankers, and chartered accountants are authorized to conduct valuations depending on the statute. The document also outlines the valuation requirements and purposes under the different statutes. It introduces Steadfast Business Consulting as a firm that can assist with valuation reports and determining fair equity values.
This document discusses equity share valuation under different statutes. It provides an overview of the purpose of equity share valuation and who can perform valuations. It then discusses valuation requirements and triggers under the key statutes - the Companies Act 2013, Income Tax Act 1961, and Foreign Exchange Management Act 1999. Finally, it covers common methods of valuation including discounted cash flow, capitalization of earnings, and asset-based approaches.
The document discusses transfer pricing and international taxation services provided by SBC, including transfer pricing documentation, dispute resolution, advisory services, and compliance filings. It outlines SBC's team of experienced professionals and their expertise in transfer pricing. Key services mentioned include transfer pricing planning, documentation, controversy resolution, risk management, and integrated tax planning. Compliance requirements such as documentation, accountant's reports, master files, and country-by-country reporting are also summarized.
This document summarizes the master file and country-by-country reporting requirements in India. It outlines the applicability, contents, forms, and due dates for master file reporting, including differences from OECD requirements. It also summarizes the applicability, contents in line with the BEPS Action 13 template, and forms and timelines for country-by-country reporting. Finally, it provides the penalties for non-compliance with master file and country-by-country reporting in India.
The document discusses emerging trends and recent judicial precedents related to transfer pricing. It provides an overview of key concepts in transfer pricing such as the arm's length principle, applicable transactions, associated enterprises, international transactions, specified domestic transactions, prescribed transfer pricing methods including comparable uncontrolled price method, resale price method, cost plus method, and profit split method. It also discusses comparables and factors affecting comparability.
The document provides updates on corporate tax and transfer pricing regulations introduced in the United Arab Emirates (UAE). Key points include:
1) The UAE will introduce corporate income tax effective June 2023/January 2024, applying to businesses and commercial activities at a rate of 0% up to AED 375,000 and 9% above. Large multinationals may face different rates.
2) Taxable income will be accounting net profit adjusted under UAE tax law and reported consistently in financial statements. Some exemptions are provided.
3) Transfer pricing rules will follow the arm's length principle per OECD guidelines, but withholding tax and tax returns involve only one filing electronically per group
The document summarizes recent amendments made by SEBI to regulations regarding related party transactions for listed entities in India. Key changes include expanding the definition of related parties, lowering the transaction value threshold for classifying deals as material, and increasing disclosure and approval requirements for related party transactions. The new rules are effective from April 1, 2022, with no deferment by SEBI, and aim to strengthen corporate governance standards for listed companies regarding related party dealings.
The document provides an overview of India's Advance Pricing Agreement (APA) regime, including key benefits of APAs, the APA application and conclusion process, sectoral analyses of concluded APAs, and comparative timelines for unilateral versus bilateral APAs. Some key highlights are that over 1,100 APA applications have been filed to date in India, with most being for the services sector. The transactional nature covered most often is payment of royalties. The transactional nature covered most often is payment of royalties. The timeline for bilateral APAs is longer than for unilateral APAs due to involvement of multiple tax authorities.
This document discusses key concepts related to the taxation of non-residents in India, including business connection, permanent establishment, and significant economic presence. It provides an overview of how non-resident companies are taxed in India based on the source of their income. The concept of permanent establishment is defined as a fixed place of business through which the business of an enterprise is carried out. The document outlines different types of permanent establishments under most tax treaties, including fixed place, agency, construction, and service PEs. It also compares and contrasts business connections and permanent establishments.
This document provides an overview of the OECD/G20 Inclusive Framework agreement on Pillars One and Two of the Base Erosion and Profit Shifting (BEPS) project. Pillar One introduces new profit allocation and nexus rules that re-allocate some taxing rights over large multinational enterprises to market jurisdictions. Pillar Two establishes a global minimum corporate tax rate of 15% through two interlocking rules: the Income Inclusion Rule and Undertaxed Payment Rule. The agreement also outlines scope, thresholds, carve-outs, dispute prevention and resolution processes, and guidance for implementation.
The document discusses the services provided by Steadfast Business Consulting LLP related to transaction advisory. It outlines the areas they specialize in including corporate restructuring, regulatory financial structuring, acquisition structuring, divestment advisory, succession planning, inbound investment advisory, outbound advisory, private equity transaction advisory, and funds/REIT/INVIT. It then provides more details on the specific services offered within each area.
Succession planning involves establishing structures and agreements to perpetuate family wealth across generations in a tax efficient manner. It ensures smooth transfer of business and personal assets while mitigating inheritance tax. Key elements include holding companies, partnerships, LLPs, trusts and family constitutions. Succession planning is often done alongside group restructuring to streamline ownership and control of businesses according to strategic vision and tax considerations. Trust structures are commonly used where a trustee holds legal title to trust property for the benefit of beneficiaries. Succession planning requires evaluating various options against tax, legal and regulatory implications.
This document provides an overview of startups in India. Some key details include:
- There are over 41,000 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).
- Startups have reported creating over 4.7 lakh jobs and received over Rs. 4,500 crore in investments through the Fund of Funds scheme.
- Various policies and reforms have been implemented to support startups, including tax benefits, regulatory changes, and programs to help startups access markets and skills training.
This document summarizes various tax and regulatory considerations for Non-Resident Indians (NRIs). It discusses the residential status of individuals under the Indian Income Tax Act and Foreign Exchange Management Act, including the criteria to be considered a resident or non-resident. It also outlines the scope of tax applicable to residents and non-residents based on their residential status. Additionally, it covers special tax provisions for NRIs related to capital gains and TDS, permissible foreign exchange investments, and types of bank accounts NRIs can open and their key features.
The document provides information on taxation and compliance requirements for expatriates working in India. It discusses obtaining the proper work visa and registering with immigration authorities. It also outlines individual tax rates and residency rules in India, as well as key employer obligations like providing maternity leave and minimum wages. Compliance areas like tax registrations, filing returns, and double taxation avoidance agreements are also summarized.
Steadfast Business Consulting LLP is a professional services firm that provides financial, auditing, taxation, secretarial, legal and advisory services. They have a team of qualified professionals with experience in accounting, finance, law, tax, auditing and business process outsourcing. Steadfast focuses on client satisfaction through engagement, team continuity and understanding client needs to provide value-driven solutions. Their objective is to deliver timely, innovative and quality services to businesses.
The document discusses the corporate secretarial services offered by Steadfast Business Consulting LLP. It provides an overview of the company's services including corporate advisory, company formation, compliance checks, secretarial audits, litigation support, and intellectual property advisory. The company aims to help clients comply with complex corporate secretarial requirements through customized solutions and a team of legal and secretarial experts.
The document summarizes recent updates to corporate and LLP laws in India in response to COVID-19. It outlines two new schemes - the Companies Fresh Start Scheme, 2020 which gives defaulting companies a chance to file overdue documents by September 2020 with normal fees, and the LLP Settlement Scheme, 2020 which allows defaulting LLPs to file certain overdue documents by September 2020 with reduced fees and immunity from prosecution. It also lists relaxations provided by SEBI and stock exchanges to reduce compliance burdens during the pandemic.
The Supreme Court of India set aside various High Court orders and ruled that reassessment notices issued under Section 148 of the Income Tax Act after March 2021 would be deemed issued under Section 148A, which was introduced in the Finance Act of 2021. This overrides High Court judgments that had quashed notices issued without following the new procedure under Section 148A. The Supreme Court provided taxpayers an opportunity to respond to the authorities within set timelines and ensured notices are processed under the correct amended provisions, in an effort to balance taxpayer rights and the ability of tax authorities to issue valid notices.
The Central Board of Direct Taxes (CBDT) has extended various income tax filing deadlines due to ongoing COVID-19 difficulties. Key extensions include the tax audit report deadline moving from January 15/31 to February 15, the transfer pricing report deadline moving from January 31 to February 15, the non-taxpayer return deadline moving from February 15 to March 15, and the taxpayer return deadline moving from February 28 to March 15. Interest will still apply on late payments over Rs. 1 lakh.
The High Court of Telangana ruled that a taxpayer is eligible to settle a dispute under the Direct Tax Vivad Se Vishwas Act (DTVSV) even if the time limit to file objections against a draft assessment order expired before the specified date of January 31, 2020. Specifically:
1) The taxpayer did not file objections to a draft assessment order issued on December 30, 2019 by the deadline of January 29, 2020.
2) The final assessment order was issued on February 10, 2020.
3) The taxpayer applied to settle the dispute under the DTVSV Act on March 30, 2020, relying on clarification in a CBDT circular that expanded the definition of an "appellant
The CBDT has extended various income tax due dates for electronic filing of forms due to technical glitches in the new income tax portal. The extensions range from 15 days to 4 months depending on the form. The CBDT has also clarified the revised payment schedule under the Voluntary Settlement Scheme (VSS) Act, extending the due date for payment of disputed tax from August 31 to September 30 without additional amount, while keeping the sunset date of October 31 for payment with additional cost. The CBIC has also extended some GST due dates under the amnesty scheme by 1 month to September 30.
The CBDT has notified the e-Settlement Scheme 2021 to electronically settle cases pending before the Settlement Commission. The scheme provides the procedure for the Interim Board constituted through the Finance Act 2021 to electronically dispose of pending applications. Key features include the Interim Board conducting e-settlement of randomly allocated applications with assistance from tax authorities. The proceedings will not be public and all communication must be electronic, without personal appearances.
The document summarizes a CBDT circular regarding a new functionality for identifying "Specified Persons" as defined under sections 206AB and 206CCA of the Income Tax Act. The circular provides relief to taxpayers by introducing a PAN search functionality to check whether a person qualifies as a "Specified Person". This will reduce the compliance burden of taxpayers having to check tax filing status of multiple payees. The circular also clarifies that no new names will be added to the list of Specified Persons during the current financial year.
The document provides updates on corporate tax and transfer pricing regulations introduced in the United Arab Emirates (UAE). Key points include:
1) The UAE will introduce corporate income tax effective June 2023/January 2024, applying to businesses and commercial activities at a rate of 0% up to AED 375,000 and 9% above. Large multinationals may face different rates.
2) Taxable income will be accounting net profit adjusted under UAE tax law and reported consistently in financial statements. Some exemptions are provided.
3) Transfer pricing rules will follow the arm's length principle per OECD guidelines, but withholding tax and tax returns involve only one filing electronically per group
The document summarizes recent amendments made by SEBI to regulations regarding related party transactions for listed entities in India. Key changes include expanding the definition of related parties, lowering the transaction value threshold for classifying deals as material, and increasing disclosure and approval requirements for related party transactions. The new rules are effective from April 1, 2022, with no deferment by SEBI, and aim to strengthen corporate governance standards for listed companies regarding related party dealings.
The document provides an overview of India's Advance Pricing Agreement (APA) regime, including key benefits of APAs, the APA application and conclusion process, sectoral analyses of concluded APAs, and comparative timelines for unilateral versus bilateral APAs. Some key highlights are that over 1,100 APA applications have been filed to date in India, with most being for the services sector. The transactional nature covered most often is payment of royalties. The transactional nature covered most often is payment of royalties. The timeline for bilateral APAs is longer than for unilateral APAs due to involvement of multiple tax authorities.
This document discusses key concepts related to the taxation of non-residents in India, including business connection, permanent establishment, and significant economic presence. It provides an overview of how non-resident companies are taxed in India based on the source of their income. The concept of permanent establishment is defined as a fixed place of business through which the business of an enterprise is carried out. The document outlines different types of permanent establishments under most tax treaties, including fixed place, agency, construction, and service PEs. It also compares and contrasts business connections and permanent establishments.
This document provides an overview of the OECD/G20 Inclusive Framework agreement on Pillars One and Two of the Base Erosion and Profit Shifting (BEPS) project. Pillar One introduces new profit allocation and nexus rules that re-allocate some taxing rights over large multinational enterprises to market jurisdictions. Pillar Two establishes a global minimum corporate tax rate of 15% through two interlocking rules: the Income Inclusion Rule and Undertaxed Payment Rule. The agreement also outlines scope, thresholds, carve-outs, dispute prevention and resolution processes, and guidance for implementation.
The document discusses the services provided by Steadfast Business Consulting LLP related to transaction advisory. It outlines the areas they specialize in including corporate restructuring, regulatory financial structuring, acquisition structuring, divestment advisory, succession planning, inbound investment advisory, outbound advisory, private equity transaction advisory, and funds/REIT/INVIT. It then provides more details on the specific services offered within each area.
Succession planning involves establishing structures and agreements to perpetuate family wealth across generations in a tax efficient manner. It ensures smooth transfer of business and personal assets while mitigating inheritance tax. Key elements include holding companies, partnerships, LLPs, trusts and family constitutions. Succession planning is often done alongside group restructuring to streamline ownership and control of businesses according to strategic vision and tax considerations. Trust structures are commonly used where a trustee holds legal title to trust property for the benefit of beneficiaries. Succession planning requires evaluating various options against tax, legal and regulatory implications.
This document provides an overview of startups in India. Some key details include:
- There are over 41,000 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).
- Startups have reported creating over 4.7 lakh jobs and received over Rs. 4,500 crore in investments through the Fund of Funds scheme.
- Various policies and reforms have been implemented to support startups, including tax benefits, regulatory changes, and programs to help startups access markets and skills training.
This document summarizes various tax and regulatory considerations for Non-Resident Indians (NRIs). It discusses the residential status of individuals under the Indian Income Tax Act and Foreign Exchange Management Act, including the criteria to be considered a resident or non-resident. It also outlines the scope of tax applicable to residents and non-residents based on their residential status. Additionally, it covers special tax provisions for NRIs related to capital gains and TDS, permissible foreign exchange investments, and types of bank accounts NRIs can open and their key features.
The document provides information on taxation and compliance requirements for expatriates working in India. It discusses obtaining the proper work visa and registering with immigration authorities. It also outlines individual tax rates and residency rules in India, as well as key employer obligations like providing maternity leave and minimum wages. Compliance areas like tax registrations, filing returns, and double taxation avoidance agreements are also summarized.
Steadfast Business Consulting LLP is a professional services firm that provides financial, auditing, taxation, secretarial, legal and advisory services. They have a team of qualified professionals with experience in accounting, finance, law, tax, auditing and business process outsourcing. Steadfast focuses on client satisfaction through engagement, team continuity and understanding client needs to provide value-driven solutions. Their objective is to deliver timely, innovative and quality services to businesses.
The document discusses the corporate secretarial services offered by Steadfast Business Consulting LLP. It provides an overview of the company's services including corporate advisory, company formation, compliance checks, secretarial audits, litigation support, and intellectual property advisory. The company aims to help clients comply with complex corporate secretarial requirements through customized solutions and a team of legal and secretarial experts.
The document summarizes recent updates to corporate and LLP laws in India in response to COVID-19. It outlines two new schemes - the Companies Fresh Start Scheme, 2020 which gives defaulting companies a chance to file overdue documents by September 2020 with normal fees, and the LLP Settlement Scheme, 2020 which allows defaulting LLPs to file certain overdue documents by September 2020 with reduced fees and immunity from prosecution. It also lists relaxations provided by SEBI and stock exchanges to reduce compliance burdens during the pandemic.
The Supreme Court of India set aside various High Court orders and ruled that reassessment notices issued under Section 148 of the Income Tax Act after March 2021 would be deemed issued under Section 148A, which was introduced in the Finance Act of 2021. This overrides High Court judgments that had quashed notices issued without following the new procedure under Section 148A. The Supreme Court provided taxpayers an opportunity to respond to the authorities within set timelines and ensured notices are processed under the correct amended provisions, in an effort to balance taxpayer rights and the ability of tax authorities to issue valid notices.
The Central Board of Direct Taxes (CBDT) has extended various income tax filing deadlines due to ongoing COVID-19 difficulties. Key extensions include the tax audit report deadline moving from January 15/31 to February 15, the transfer pricing report deadline moving from January 31 to February 15, the non-taxpayer return deadline moving from February 15 to March 15, and the taxpayer return deadline moving from February 28 to March 15. Interest will still apply on late payments over Rs. 1 lakh.
The High Court of Telangana ruled that a taxpayer is eligible to settle a dispute under the Direct Tax Vivad Se Vishwas Act (DTVSV) even if the time limit to file objections against a draft assessment order expired before the specified date of January 31, 2020. Specifically:
1) The taxpayer did not file objections to a draft assessment order issued on December 30, 2019 by the deadline of January 29, 2020.
2) The final assessment order was issued on February 10, 2020.
3) The taxpayer applied to settle the dispute under the DTVSV Act on March 30, 2020, relying on clarification in a CBDT circular that expanded the definition of an "appellant
The CBDT has extended various income tax due dates for electronic filing of forms due to technical glitches in the new income tax portal. The extensions range from 15 days to 4 months depending on the form. The CBDT has also clarified the revised payment schedule under the Voluntary Settlement Scheme (VSS) Act, extending the due date for payment of disputed tax from August 31 to September 30 without additional amount, while keeping the sunset date of October 31 for payment with additional cost. The CBIC has also extended some GST due dates under the amnesty scheme by 1 month to September 30.
The CBDT has notified the e-Settlement Scheme 2021 to electronically settle cases pending before the Settlement Commission. The scheme provides the procedure for the Interim Board constituted through the Finance Act 2021 to electronically dispose of pending applications. Key features include the Interim Board conducting e-settlement of randomly allocated applications with assistance from tax authorities. The proceedings will not be public and all communication must be electronic, without personal appearances.
The document summarizes a CBDT circular regarding a new functionality for identifying "Specified Persons" as defined under sections 206AB and 206CCA of the Income Tax Act. The circular provides relief to taxpayers by introducing a PAN search functionality to check whether a person qualifies as a "Specified Person". This will reduce the compliance burden of taxpayers having to check tax filing status of multiple payees. The circular also clarifies that no new names will be added to the list of Specified Persons during the current financial year.
Direct Tax - Section 206AB _ 206CCA - CBDT Circular No. 11 of 2021.pdf
Direct Tax - Tax Alert - Section 194R.pdf
1. SBC Tax Alert
18 June 2022
Central Board of Direct Taxes issues guidelines to remove difficulties in the application
of TDS on benefits and perquisites introduced vide Finance Act 2022
In this Tax Alert, we have summarised the recent guidelines issued by the Central Board of Direct Taxes,
India (CBDT) for the removal of difficulties in the application of Section 194R.
Section 194R of the Income-tax Act,1961 (ITA) mandates a person, who is responsible for providing any
benefit or perquisite to a resident, to deduct tax at source @10% of the value or aggregate of the value of
such benefit or perquisites.
CBDT has issued these guidelines dated 16-June-2022 to provide clarity on numerous vexed issues like
taxability in recipient’s hands, nature of asset given, TDS compliance where cash component falls short,
valuation, free medicines samples, sales discount and rebates, other incentives, out-of-pocket expenses,
among others
Background to the Guidelines
• Section 194R inserted by the Finance Act, 2022 for TDS on benefits and perquisites would be
operative and come into effect on 01-July-2022.
• TDS is applicable even if the benefit or perquisites is given in cash or kind.
• Rate of TDS is 10% of the value or aggregate value of such benefit or perquisite provide in a FY.
• Deduction is not required if the value of such benefits or perquisite does not exceed INR 20,000.
Key takeaways from the Guidelines
• Person providing benefit or perquisite not to check taxability u/s 28(iv) of ITA in the hands of
the recipient – Section 194R on a different footing from Section 195. While in Section 195 the person
responsible for paying any sum to non-residents is required to check the chargeability of the sum
under the ITA, such an obligation is not casted for deductor u/s 194R. Taxability or non-taxability in
the hands of the deductee is not to be a ground for non-application of 194R.
• Benefit or perquisite can be in cash or in kind or partly in cash and partly in kind – Guidelines
provide that Proviso to the Section is apt to cover any kind of benefit and covers all the three situations
- Completely in cash
- Completely in kind
- Partly in cash and partly in kind
• Capital assets for deductee also to be covered – Nature of benefit or perquisite in the hands of the
recipient would not be the criteria. Even capital assets are covered and liable for TDS deduction.
• Sales discount, cash discount and rebated NOT liable for TDS u/s 194R – General sales discount,
cash discount and rebates which effectively reduces the purchase price for the buyer would not be
2. liable to TDS. Further, additional free items on sale of a determined quantity of a product would not be
liable to TDS. However, the following shall be liable for TDS u/s 194R
- Free samples
- Any incentive other than sales discount, cash discount and rebates liable for TDS
- Trip on achieving targets
- Free ticket for events
- Free medicine samples to medical practitioners
• Benefits or perquisites given to relatives/employees of the recipient are also liable for TDS
- Benefits/perquisites may be used by the owner/director/employee of the recipient entity or their
relatives who in their individual capacity may not be carrying on business or exercising a profession.
However, TDS is applicable.
• Provisions of Section 17(2) for taxing the perquisites in the hands of employee to be
checked if the recipient is liable for TDS u/s 194R - Where an employee of any recipient receives
a benefit/perquisite, the threshold and liability of TDS on recipient would arise. Recipient would
further be required to check the liability for TDS u/s 192 to claim the same as business expenditure.
(Especially in the case of hospitals)
• TDS where the Consultant of the recipient is provided the benefit/perquisite – There may be
a scenario where benefit/perquisite is provided to a doctor of a hospital who works as a consultant
to the hospital. In such a situation TDS u/s 194R can be under the two alternatives
- Alternative 1: Tax is deducted by the provider on hospital u/s 194R and then by the hospital
on the consultant again u/s 194R
- Alternative 2: Tax is directly deducted from the consultant by the provider u/s 194R
• Valuation of benefit/perquisite – The following are the key points to be noted:
- FMV of the benefit/perquisite to be taken for the purpose of TDS except in the following
cases
Benefit/perquisite Value for TDS u/s 194R
Purchased by provider for giving it to
recipient
Purchase price in the hands of
provider
Provider is the manufacturer of the
same
Price normally charged to
customers
- GST is not to be included in valuation
• Product given to social media influencer if not returned to provider liable for TDS – Where
the product is retained by social media influencer after making audio/video about the product in
social media, then it will be in the nature of benefit/perquisite liable for TDS u/s 194R
3. • Out-of-pocket expenses (OPE) liable to TDS u/s 194R on a case-to-case basis - Following are
the three scenarios that may arise
Scenario Particulars Whether liable for
TDS u/s 194R
1 - Service provider bills OPE to Company X
- Invoices of OPE items are in the name of
service provider
- Service provider pays the amount initially for
OPE
Company X liable to
deduct TDS u/s 194R
2 - Service provider bills OPE to Company X
- Invoices of OPE items are in the name of
Company X
- Service provider pays the amount initially for
OPE
Company X is not
liable to deduct TDS
u/s 194R
3 - Invoices of OPE items are in the name of
Company X
- Company X pays the amount directly or at a
later point in time to the third parties
- OPE is mentioned in the bill for record
purposes and not claimed as reimbursement
Company X is not
liable to deduct TDS
u/s 194R
• Dealer conferences to educate about the products not liable for TDS - Expenditure pertaining
to deafer/business conference would not be considered as benefit/perquisite in a case where
dealer/business conference is held with the prime object to educate dealers/customers
Exceptions (i.e., situations where TDS u/s 194R shall be applicable):
- Conference for select dealers on achieving targets
- Leisure trip or leisure component (even if incidental to educational conferences)
- Expenditure of family members accompanying the dealers (even in the case of educational
conferences)
- Expenditure for prior stay or overstay to the dates of any type of conference
• TDS u/s 194R where benefit/perquisite is in kind or partly in cash and partly in kind and the
cash component is not sufficient for making TDS deduction – Provisions of Section 194R that
in such a situation the provider has to ensure that TDS required to be deducted is already paid by
the recipient.
On the issue, how would the provider ensure that the TDS required to be deducted is already
paid, CBDT has clarified as follows:
- Deductor to take a declaration and advance tax challan copy confirming that TDS required
to be deducted is already paid. Provisions in Form 26Q shall be made for such declaration.
- Alternatively, the deductor can pay the TDS and such TDS paid shall also be liable for TDS
u/s 194R as a benefit/perquisite
4. For example: If the FMV of the benefit/perquisite in kind is INR 30000 and TDS liable is 3000,
then the total TDS liability u/s 194R shall be as follows:
Particulars Amount in INR
FMV of benefit/perquisite in kind (A) 30,000
TDS on above benefit/perquisite (B) 3,000
Total benefit/perquisite for the purpose of 194R (A+B) 33,000
Total TDS liability u/s 194R 3,300
• Threshold of INR 20,000 is to be reckoned from 01-April-2022, however, TDS is applicable
only on transactions entered on or after 01-July-2022 – Threshold applicable to FY and hence
if the limit of benefit/perquisite is breached before June 2022, then TDS applicable from every rupee
of benefit/perquisite incurred from 01-July-2022. Benefits/perquisite provided on or before 30-June-
2022 not liable for TDS.
SBC comments
While the CBDT guidelines provide much-needed clarification on the various issues which were unclear
from the raw text or the memorandum explaining the introduction of Section 194R of the ITA, these
clarifications would lead to various comprehensions and practical difficulties in the application of Section
would be tested only in coming times. Certain issues like the following may arise:
- Declaration of tax paid in the case where benefit/perquisite is given in kind and other documentation
would add to the compliance burden of both the provider as well as the recipient.
- Valuation of market-linked/products with dynamic prices given as perquisite/benefits may be difficult
and also be challenged by tax authorities increasing the scope and costs of litigation for the
deductors.
- Valuation specifically in the case of leisure trips, conferences, pre and postdates of the trips involved
would be a humongous task as the bookings are made inclusively for all the dates, family members,
etc.
- TDS deduction u/s 192 for a benefit/perquisite to employee and claim of the same as expenditure in
the hands of recipient may be checked. Where missed, such benefit/perquisite would get taxed in
the hands of the recipient as the same would appear in its AIS.
- TDS on OPE is being done by most of the deductors mostly under 194J. A relook on the matter
would be recommended. TDS on pure case reimbursements may still be challenged and may add
to litigation for the deductors.
How can SBC help?
- TDS health check for applicability of Section 194R of ITA
- Assisting in valuation, quantifying the liability, obtaining required declarations, compliances, etc.,
- Case-to-case basis analysis and opinion on any specific instance for applicability of 194R
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w ww .s t ea df a st co n su lt a nt s. in
SBC refers to one or more of Steadfast Business Consulting LLP (LLPIN: AAL-1503), a Hyderabad based Limited Liability
Partnership, and its network of member firms, branches and affiliates. SBC provides tax, consulting, audit and financial advisory
services to clients within and beyond borders spanning multiple industries. With local connect and expertise put together with global
outlook and capabilities, SBC believes in providing holistic solutions to clients tailored to meet business objectives and address most
complex challenges and at the same time be robust, scalable and sustainable from a tax, legal and regulatory standpoint.