# Section 194R - TDS on Benefit or Perquisite

## Scope

Any benefit or perquisite, whether convertible into money or not, arising from Business or Profession.

## Key Parameters

Rate: 10%
Payer: HIJACR Assessee
Payee: Any Resident Person

## No TDS Conditions

Amount of benefit/perquisite provided to a person is up to ₹20,000 in a P.Y.
If gift is in kind, payer must ensure TDS is deducted & paid to government in respect of such benefit

## CBDT Guidelines

### Q1: Must the benefit always be in kind for TDS u/s 194R?

Answer: NO. It can be:

In Kind
In Cash
Partly in kind, partly in cash

### Q2: If benefit is partly in kind and partly in cash, how to ensure deduction and payment of tax?

Answer: Either:

Ask the payee to pay advance tax and give declaration, OR
The payer himself pays the tax

Worked example

### Example 1

Example: A pharmaceutical company gives a free foreign trip worth ₹75,000 to a doctor as a business promotion. Is TDS deductible u/s 194R?

Answer: Yes. Since benefit exceeds ₹20,000 threshold and arises from business, TDS @ 10% on ₹75,000 = ₹7,500 must be deducted. As benefit is in kind, the payer must ensure tax is paid before releasing the benefit.

⚠️ Common exam mistakes

Thinking 194R applies only to benefits in kind — it covers cash, kind, and mixed forms
Not deducting TDS when cumulative benefit to one person crosses ₹20,000 during PY
Forgetting payer's responsibility to ensure tax payment for in-kind benefits before release

Reference: 194R

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 Benefit or Perquisite from Business/Profession

Worked example

⚠️ Common exam mistakes