Section 194R of Income Tax Act for AY 2023-24

Provisions and rules related to section 194R of Income Tax Act. Deduction of tax on benefit or perquisite in respect of business or profession.

Amended and updated notes on section 194R of Income Tax Act 1961 as inserted by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction of tax on benefit or perquisite in respect of business or profession.

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961-2022 deals with the provisions related to collection and recovery of tax. Section 194R of IT Act 1961 provides for deduction of tax on benefit or perquisite in respect of business or profession.

Recently, we have discussed in detail section 194Q (Deduction of tax in case of specified senior citizen) of IT Act 1961.

Today, we learn the provisions of section 194R of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 194R is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 194R of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-194R: Deduction of tax on benefit or perquisite in respect of business or profession

[Section 194R newly inserted w.e.f. 1-July-2022 by the Finance Act 2022]

Section 194R (1):

Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, by such resident, shall, before providing such benefit or perquisite, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit or perquisite at the rate of ten per cent. of the value or aggregate of value of such benefit or perquisite:

Provided that in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite:

Provided further that the provisions of this section shall not apply in case of a resident where the value or aggregate of value of the benefit or perquisite provided or likely to be provided to such resident during the financial year does not exceed twenty thousand rupees:

Provided also that the provisions of this section shall not apply to a person being an individual or a Hindu undivided family, whose total sales, gross receipts or turnover does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such benefit or perquisite, as the case may be, is provided by such person.

Section 194R (2):

If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

Section 194R (3):

Every guideline issued by the Board under sub-section (2) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person providing any such benefit or perquisite.

Explanation: For the purposes of this section, the expression “person responsible for providing” means the person providing such benefit or perquisite, or in case of a company, the company itself including the principal officer thereof.


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