SECTION 194R APPLICABILITY

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This discussion clarifies the applicability of Section 194R of the Income Tax Act concerning benefits provided to dealers and distributors. Even if the sales achievement relates to the previous financial year (FY 2021-22), TDS under Section 194R will apply if the benefit, such as gold coins, is distributed after July 1st, 2022. The key factor is the timing of the benefit's provision, not the period to which the underlying scheme pertains.

CA. ANKIT PANDYA

CA. ANKIT PANDYA (Querist)
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02 July 2022 We want to distribute benefit/perquisite in the form to gold coins to our dealers/distributors in this year ie, post 1st of July 2022. This benefit is for achieving the sales for previous financial year i.e. FY 2021-22. The said scheme was very well drafted and circulated to all the concerned during the beginning of the previous FY. only distribution of the coins will take place in this financial year.

now the question is whether TDS under section 194R is applicable even if the scheme under which we are providing such benefit belong to previous year?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 July 2022 Yes, 194R applicable such payment will be considered as income of the current year

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CA. ANKIT PANDYA

CA. ANKIT PANDYA (Querist)
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02 July 2022 As a provider of benefit, this is part of my sales promotion expenditure. I have already booked the expenses relating to this in the previous year, only distribution I am doing in the current month i.e. post July 2022. does the applicability remains the same in this case also.
What is the remedy available then?

CA. ANKIT PANDYA

CA. ANKIT PANDYA (Querist)
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