TDS on purchase of value vouchers for employees ?

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This discussion clarifies whether Tax Deducted at Source (TDS) applies to value vouchers given to employees for shopping at company events. While initially considered staff welfare, if vouchers are viewed as remuneration, TDS under Section 192 (Salary) might apply. Alternatively, if treated as a benefit or perquisite, TDS under Section 194R could be applicable on the voucher recipients.

FinTax (CA ABHISHEK SINGH)

FinTax (CA ABHISHEK SINGH) (Querist)
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06 November 2024 Company arranged picnic in Imagica for employees. They raised invoice for Tickets, Snacks & beverages ( 300000+100000+25000)and also separate invoice for value vouchers (Rs.101000) which was used by employees for shopping in Imagica.

Need clarity on deduction of tax at source on value vouchers

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 November 2024 If the value vouchers are seen as part of the salary or as a form of additional remuneration, then the company might have to treat the value vouchers as taxable income for the employees, and TDS could apply under Section 192 (Salary). The company would need to calculate the applicable TDS rate based on the total taxable income of the employee.

FinTax (CA ABHISHEK SINGH)

FinTax (CA ABHISHEK SINGH) (Querist)
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23 November 2024 No its not part of salary. It is classified as staff welfare expenditure in the P&L

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 November 2024 In that case TDS u/s. 194R will be applicable over the voucher recipients.

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