## Section 194R — TDS on Benefits or Perquisites

### Scope

Applies to any benefit or perquisite arising from business or exercise of profession, given to a resident.

### Valuation of the Benefit/Perq

Source of Benefit	Value to be Adopted
Payer has purchased the item	Purchase Price
Payer manufactures the item	Normal Price it charges from other customers

### GST Treatment

→ GST is NOT included in the valuation of the benefit/perquisite for Section 194R purposes.

### Social Media Influencer Case (Key Application)

When a company gives a product to a social media influencer for promotion:

Scenario	TDS u/s 194R Applicable?
Influencer RETURNS the product after promotion	❌ No
Influencer RETAINS the product	✅ Yes

### Logic

If the product is returned, there's no real benefit retained — only use during promotion. If retained, the influencer has received a tangible benefit on which TDS applies.

Worked example

### Example 1

Example 1 — Manufactured Product to Influencer:

ABC Cosmetics (a manufacturer) gives a beauty kit to an influencer. The kit's market selling price = ₹25,000 + 18% GST. The influencer keeps the kit.

Analysis:

Value of perq u/s 194R = ₹25,000 (Normal price, GST excluded)
Influencer retains → TDS u/s 194R applicable at 10% = ₹2,500.

Example 2 — Returned Product:

Same facts, but the influencer returns the kit after a 7-day promotional review.

Analysis: No benefit retained → No TDS u/s 194R.

Example 3 — Purchased Item:

A company purchases a smartwatch for ₹15,000 (incl. ₹2,000 GST) and gifts to a dealer.

Analysis: Value = Purchase Price net of GST = ₹13,000. TDS @ 10% = ₹1,300.

⚠️ Common exam mistakes

Including GST while valuing the benefit u/s 194R — explicitly excluded.
Applying 194R when influencers return the product after promotion.
Using market price when the payer has purchased the item — purchase price is the correct value.
Applying 194R to benefits given to non-residents (Section 195 applies for non-residents).

Bare-Act text Section 194R · Income-tax Act, 1961 · click to expand

For Sec 194R: How is Value of Gift/Benefit Determined? If Payer has purchased it: Purchase Price. If Payer Manufactures: The Normal Price it Charges from Others. Note: GST not included for valuation of benefit/perq. for Sec 194R. Is 194R applicable when Social Media Influencer is given Products? If Influencer returns product: NO. If Influencer Retains product: YES.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Section 194R - TDS on Benefits/Perquisites

Worked example

⚠️ Common exam mistakes