CBDT CIRCULATES GUIDELINES ON APPLICABILITY OF NEW TDS PROVISION REGARDING GIFTS, BENEFITS RECEIVED BY INFLUENCERS| DETAILS HERE
As per INDIA TODAY, Social media influencers must pay TDS if they keep the equipment provided to them as part of a company’s marketing efforts. If it is returned to the company, TDS will not apply.
- Freebies will be taxed at 10% for social media influencers.
- Doctors, like influencers, will have to pay taxes on the freebies they receive from pharmaceutical companies.
- TDS will not be applied if the influencers return the product.
The Central Board of Direct Taxes (CBDT) has issued a set of guidelines outlining the circumstances under which the new tax deducted at source (TDS) provision, which goes into effect on July 1, will apply. The provision was included in the 2022 Finance Act to broaden the tax base and ensure that those who benefit from such sales promotion expenditure by businesses report it in their tax returns and pay tax on the value of the benefit. According to the CBDT, if a social media influencer keeps a product from a manufacturing company after using it to render a service, it will be treated as a benefit/prerequisite under the newly-introduced Section 194R of the IT Act. However, if the product is not contained, the provision is inapplicable.
The tax body clarified that if doctors receive free samples of medicines while working at a hospital, the new tax provision on the distribution of free samples to the hospital will apply.
If a company provides a free medicine sample to a doctor who is a hospital employee, the TDS will be deducted by the company because the benefit/perk is provided to the doctor because he is a hospital employee. In essence, the hospital receives the benefit/perquisite.
Section 194 R applies when a person provides incentives (other than a discount or rebate) in the form of cash or kind, or when a person sponsors a trip for the recipient and his/her relatives in an exchange. The tax department provided clarification on sales discounts, cash discounts, and rebates allowed to customers by excluding them from the scope of the new section because their inclusion would cause problems for a seller. The primary goal of this move is undoubtedly to broaden the tax base and make tax provisions applicable to new millennial businesses such as social media influencers.
What do you think about this new tax rule? Tell us your thoughts in the comments!
CHECKOUT WHAT INFLUENCERS HAVE TO SAY ON THIS TDS DEDUCTION!
@aakank_shaaa , A fashion Influencer says “Kudos to the Indian government for finally taking a step in the right direction and understanding how Influencers should be taken seriously even if it means we’ll have to pay taxes. I mean, I don’t mind. I can at least say that I am also a taxpayer now! And that sounds like #Adulting to me!”
@_celine_joseph_ , A fashion Influencer says, “I strongly believe that it’s a great initiative taken by the government to impose a tax on freebies received by us. TDS being cut will somehow draw people’s attention and make them realize that even being a barter Influencer is a legitimate profession. So I think it’s a win-win for us.”
@starfishika , A beauty Influencer says,” As per Mint, we will have to pay a TDS of 10% if the product given to us for sales promotion is retained by us. Don’t mind paying a cut if the product is worth enough! Also, the sound of being a taxpayer got a good ring!”
@____nishi , A digital creator says, “Great move!! At first, I was like Whattttt?? Am I earning enough to pay TDS now, but when I look on the other side I realized that if TDS is being deducted that means we are no less than other professionals. Bring it on! Total game for it.
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