According to a senior tax official, the finance ministry would explain any questions about the applicability of the new TDS provision to advantages or perquisites obtained in a business or profession.
NEW DELHI: According to Kamlesh C Varshney, Joint Secretary in the Finance Ministry, such benefits and perquisites are income and are always taxed, whether obtained in cash or in kind. TDS on such income was introduced in the Budget 2022-23 to combat tax revenue leakage. In the IT Act, a new section, 194R, was added in the Budget. The new rule will take effect on July 1st.
"Nobody was paying taxes on this (benefits and perquisites) despite receiving advantages and perquisites in the course of business and profession... There is obviously a leak here, which is why this section 194R exists. Whatever the concerns, we will address the practical challenges before July 1 "Varshney said this while talking with members of the Assocham industrial chamber.