The 60-second version
Section 194R requires 10% TDS when I provide taxable benefit/perquisite to resident business partner above threshold — applies to free goods, junkets, and incentive trips.
194R hits the giver — not the recipient's payroll TDS
Section 194R applies when I provide benefit or perquisite in course of business to a resident — 10% TDS on value before handing over car, trip, or sample stock.
If recipient lacks PAN, rate jumps under Section 206AA — collect PAN before incentive program.
Gross-up contract clause common — I bear TDS so recipient receives full advertised benefit.
Buyer lane: Section 194Q guide.
Benefit TDS sections
| Section | Rate | What triggers |
|---|---|---|
| 194R benefit | 10% | Business perquisite in kind/cash |
| 194Q goods | 0.1% | Buyer purchase > ₹50L |
| 194C contractor | 1% / 2% | Contract payments |
| 194J professional | 10% | Professional fees |
| 194H commission | 5% | Commission > ₹15k |
194R compliance sequence
Value benefit
Fair market value per CBDT circular.
Deduct 10%
Before releasing goods or paying cash component.
Challan 281
Deposit by 7th of next month.
26Q + 16A
Quarterly return and recipient certificate.
Gross-up if needed
Contract clause for net benefit to dealer.
TDS flow
194R seller kit
- TAN.
- Recipient PAN.
- Benefit valuation sheet.
- Challan receipts.
- 26Q ACK.
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GST on free samples
Schedule I deemed supply may apply — 194R is separate from GST liability.
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0 of 4 checked
Dealer conference?
Taxable perquisite if business promotion — TDS on FMV.
Social media influencers?
May be 194J not 194R — characterize payment.
Threshold?
No minimum — each benefit triggers if in course of business.
NRI recipient?
Section 195 may apply — not 194R.
Gross-up cost?
Gross-up increases expense — budget in campaign.
Missed TDS?
Interest + disallowance until deposited.
Your tax year is already running.
RNOR status, exit timing, and DTAA benefits all depend on decisions you make before you land. Don't guess.