New TDS Rule From 1st July 2022: 10 percent tax to be paid on gifts to influencers and doctors
The Central Board of Direct Taxes (CBDT) issued guidelines on new TDS provision regarding benefits received in a business or profession.
Refer Circular: TDS on perquisites: CBDT issues clarifications on Newly introduced Section 194R
The New Guideline will come in effect from July 1, 2022 and impose a 10% tax on gifts donated. It is important to note that influencers and doctors are currently receiving expensive gifts without being paid directly, all in the name of promotion. However, since the government will now retain the free gifts delivered under the tax net, it will now cost money to receive free gifts.
It will also apply if a seller offers cash or in-kind incentives to medical professionals, such as a gold coin, phone, sponsored trip, or pharmaceutical samples. It is set to impact social media influencers and doctors.
The corporation will fall under TDS’s jurisdiction if it provides free drug samples to hospital employees and consultants. The CBDT states that the tax will be charged to the hospital charges if a doctor or consultant receives a gift. The hospital can then deduct taxes from the costs associated with paying its workers’ salaries.
No tax is applicable if products are returned after review
According to CBDT, gifts include clothing, mobile phones, vehicles, and cosmetics. However, after use, these goods are occasionally returned. The 194R Act of the CBDT will not apply to such products. However, if the goods are not returned, they will be counted toward the person’s earnings. In this situation, the tax due from that person is 10%.
No tax on return of the gift
The Sales Promotion Guidelines of the Finance Act 2022 have been modified by the Central Board of Direct Taxes (CBDT). This Act now contains a new tax provision requiring TDS to be paid on gifts given to medical professionals and social media influencers. The CBDT has stated, however, that TDS will not be levied on the gifts if the corporation returns them.
Which gift will be taxed?
- gold coin
- Mobile phone
- Foreign ticket