{"id":541,"date":"2025-07-23T17:47:33","date_gmt":"2025-07-23T12:17:33","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=541"},"modified":"2025-07-23T17:49:07","modified_gmt":"2025-07-23T12:19:07","slug":"194r-tds","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/194r-tds\/","title":{"rendered":"Section 194R TDS: Tax Implications on Business Perks"},"content":{"rendered":"\n<p>Section 194R TDS, introduced in the Income Tax Act, 1961, mandates the deduction of Tax Deducted at Source @ 10% on benefits or perquisites provided to residents in the context of their business or profession if exceeds Rs. 20,000 in a financial year.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#Applicability\" >Applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#Deduction\" >Deduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#Return_and_Certificate\" >Return and Certificate<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#Examples_of_benefits_or_perquisites\" >Examples of benefits or perquisites<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#Non_Applicability_of_provision_of_Section_194R\" >Non Applicability of provision of Section 194R<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#TDS_on_Reimbursement_of_Expenses\" >TDS on Reimbursement of Expenses<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#When_TDS_Is_Required\" >When TDS Is Required<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#When_TDS_Is_Not_Required\" >When TDS Is Not Required<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#How_is_the_valuation_of_benefitperquisite_require_to_be_carried_out\" >How is the valuation of benefit\/perquisite require to be carried out?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/194r-tds\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability\"><\/span>Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This applies to deductor &#8211; individuals, HUF, companies or entities providing a benefit or perquisite in cash, kind, or both.<\/li>\n\n\n\n<li>The recipient must be a resident assessee.<\/li>\n\n\n\n<li>TDS is deducted only when the total value of benefits exceeds INR 20,000 in a financial year.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deduction\"><\/span>Deduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>TDS is deducted at 10% (20% in case of no PAN) on the value of benefits.<\/li>\n\n\n\n<li>TDS must be deducted before providing benefits or perquisites to deductee.<\/li>\n\n\n\n<li>The provider is responsible for TDS deduction.<\/li>\n\n\n\n<li>Valuation is based on fair market value.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Return_and_Certificate\"><\/span>Return and Certificate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>File quarterly TDS return (Form 26Q).<\/li>\n\n\n\n<li>Issue Form\u202f16A to recipient every quarter.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Examples_of_benefits_or_perquisites\"><\/span>Examples of benefits or perquisites<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Expenditure on family trip accompanying the person on business conference trip.<\/li>\n\n\n\n<li>Incentives in the form of cash or kind such as gold coins, mobile phones, TV etc.<\/li>\n\n\n\n<li>Free medicine samples provided by a company to a doctor.<\/li>\n\n\n\n<li>Expenses attributable to leisure trip or leisure component, even if it is incidental to the dealer or business conference.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non_Applicability_of_provision_of_Section_194R\"><\/span>Non Applicability of provision of Section 194R<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Benefits received by employees are taxed under Section 192, not Section 194R.<\/li>\n\n\n\n<li>Recipient is a non resident.<\/li>\n\n\n\n<li>No business relationship.<\/li>\n\n\n\n<li>Value of benefits is less than Rs. 20,000 in a year<\/li>\n\n\n\n<li>Turnover in case of business is less than 1 Crore and in profession less than 50 lakh<\/li>\n\n\n\n<li>Cash discount, sales discount or rebate<\/li>\n\n\n\n<li>Gift on festival or marriage ceremony<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_on_Reimbursement_of_Expenses\"><\/span>TDS on Reimbursement of Expenses<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_TDS_Is_Required\"><\/span>When TDS Is Required<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you spend on something like travel, and the client reimburses you the amount, it will be treated as a benefit or perquisite and TDS may be deducted.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_TDS_Is_Not_Required\"><\/span>When TDS Is Not Required<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If the travel bills are in the client&#8217;s name &#8211; you paid it and reimbursed by the client, then no TDS on the reimbursement.<\/p>\n\n\n\n<p>If the expense is part of your professional fees and TDS has already been deducted under Section 194C or 194J, then no separate TDS is needed on reimbursement.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_the_valuation_of_benefitperquisite_require_to_be_carried_out\"><\/span>How is the valuation of benefit\/perquisite require to be carried out?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The valuation will be based on the FMV of benefits or perquisites except in the following cases:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The benefit\/perquisite provider has purchased the benefit\/perquisite before providing it to the receipient . In that case, the purchase price shall be the value of such benefit\/prequisite.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The benefit\/perquisite provider manufactures such items given as benefit\/perquisite, then the price that is charged to its customers for such items shall be the value of such benefit or perquisite.<\/li>\n<\/ul>\n\n\n\n<p>It is further clarified that GST will not be included for the purpose of valuation of benefit\/perquisite for TDS under section 194R of the Act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1724152592857\"><strong class=\"schema-faq-question\">What are the key differences between TDS under Section 194R and Section 195?<\/strong> <p class=\"schema-faq-answer\">Section 194R applies to domestic transactions, with a 10% TDS rate on benefits when amount exceeds Rs. 20,000 in a year. On the other hand Section 195 applies to payments made to non-resident Indians.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724152607561\"><strong class=\"schema-faq-question\">In which scenarios section 194R does not apply?<\/strong> <p class=\"schema-faq-answer\">Section 194R does not apply when there is an employer-employee relationship or allowances are received by a non-resident Indian.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724152621577\"><strong class=\"schema-faq-question\">What is the TDS rate under Section 194R for reimbursements?<\/strong> <p class=\"schema-faq-answer\">The TDS rate under Section 194R for reimbursements exceeding Rs. 20,000 is 10%.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Section 194R TDS, introduced in the Income Tax Act, 1961, mandates the deduction of Tax Deducted at Source @ 10% [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":542,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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