Section 194 R

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This discussion addresses the challenges of complying with Section 194R for promotional gifts, such as gold coins, when the ultimate recipient's details (like PAN) are unavailable. The team explores options including higher TDS rates (20% or 30% disallowance) and suggests a method of collecting recipient details retrospectively by asking agents to report previous month's received gifts when disbursing current incentives. This approach aims to enable TDS filing at the standard 10% rate, preventing higher deductions or disallowances.

Saran sivan M

Saran sivan M (Querist)
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05 July 2022 Hi team,

Section 194 R is applicable from 1st July.

My Question given in below points.

My company is giving Gold coins & other items as Business promotion certain people
If I don't have the details of the ultimate person who is getting the item, how i can comply with 194R, even if I am okay to bear the TDS cost of these items provided.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 July 2022 Bear the TDS on cost of these items but file TDS return in the name of the person who got the coins.

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Saran sivan M

Saran sivan M (Querist)
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06 July 2022 Yes Sir, company is ready to bear it, but we dont have the track or PAN of the ultimate person who is getting this benefit.

One option would be higher rate of Tax @20% - any other option?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 July 2022 Other option 30% of expenses is disallowed for non deduction of TDS.

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CA Puja Sharma

CA Puja Sharma (Expert)
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06 July 2022 Deduct TDS cumulatively on the amount.
While disbursing the incentives for the next month, ask your agents to report the gold coins they received in the previous month.
This way, you will get the details of the ultimate prize holder, and you will be able to file the TDS return with PAN @ 10% TDS.
Otherwise, you have to lose 20% to 30%

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Saran sivan M

Saran sivan M (Querist)
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06 July 2022 Yes you are right. Only challenge will be in getting the PAN of ultimate person who is taking the benefit. This section will get control in the misuse of such kind of incentives or promotional expenses of business, where without any identity company is proving perquisites.

Thank you Seetharaman Sir & Ms. Puja for your great comments and time.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 July 2022 You are welcome.............

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