The new section for TDS @10% on freebies will be effective from the 1st July, 2022.
As per the section 10% TDS will need to deposit on freebies or perquisites received in a year.
TDS will not be liable to pay if value of freebies are less than 20 thousand rupees.
The new provisions are more relevant to Influencers and Doctors as they regularly receives freebies or in kind perquisites.
The section reads “The proposed new section provides that the person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession by such resident, shall, before providing such benefit or perquisite, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit or prerequisite at the rate of ten per cent. of the value or aggregate of the value of such benefit or perquisite,”.
If the freebies are returned after the promotion then TDS are not required to deposit.
The CBDT has also clarified that sales discounts, cash discounts and rebates allowed to customers by the businesses will not count as a “benefit” and thus, customers don’t have to pay the TDS on the same.
However, free samples are subject to the 10% TDS. Therefore, any person that receives free samples from a business needs to pay 10% TDS. Further, TDS would also include perquisites in cash or in kind such as cars, electronics and so on.
In the case of doctors and hospitals, free medicine samples provided to them will also attract TDS. In case the doctor is an employee of a hospital, the hospital will have to pay the TDS, and if the doctor has an independent practice, then he/she will have to file the TDS.