To expand the realm of TDS, Union Budget 2022-2023 has introduced a new provision Section 393(1) Table 8(iv) under the Income Tax Act, 2025 (herein after referred as “The Act”) that provides for deduction of tax (TDS) on benefit or perquisite in respect of business or profession, to be effective from April 01, 2026.
Section 393(1) Table 8(iv) mandates a person who is providing any benefit or perquisite, arising from business or profession, to deduct TDS at the rate of ten percent of the value or aggregate of the value of such benefit or perquisite. The benefit or perquisite may be in cash or in kind.
- Applicability
To all assessee (other than Individual & HUF) and Individual & HUF (having Business Aggregate Turnover above Rs. 1 Crore, or in case of Profession, professional receipt above Rs. 50 Lakhs) in the tax year 2026-2027. However, there are some other circumstances, wherein the tax shall not be deducted under Section 393(1) Table 8(iv):- In the case of an employer-employee relationship, tax shall be deducted under Section 393 of the Act
- In the case of the non-resident recipient, tax shall be deducted under Section 393(1) [Table 2: Payments to Non-Residents] of the Act
- If there is no connection of benefits or perquisites with the business or profession of the resident recipient
- If the benefits or perquisites are provided to a customer who does not involve in business or profession.
- Deductor
Any person who is deducting the tax on any benefit or perquisite. The deductor can be a resident or a non-resident person. - Deductee
Any resident person to whom the benefits or perquisites are provided and that is arising from the business or the exercise of a profession by such resident. - Rate
10% of the value of the benefit or perquisite. - Threshold Limit
Total Benefit value > Rs. 20,000 per Financial Year.
OVERVIEW OF CBDT GUIDELINES:
To draw out the strain in implementing the provisions of Section 393(1) Table 8(iv), the Central Board of Direct Taxes (CBDT) has issued guidelines to entangle the provisions of Section 393(1) Table 8(iv).
Below are few practical circumstances envisaged in CBDT Circular and summarised in form of FAQ’s which would help taxpayers to interpret the provisions of Section 393(1) Table 8(iv) in depth:-
Question 1: Is it necessary to check if the amount of benefit or perquisite is taxable under section 28(iv) of the Act?
Answer: No. the deductor is not required to check whether the benefit or perquisite is taxable in the hands of the recipient under Section 26(f) of the Act as the applicability of Section 26(f) is not linked to Section 393(1) Table 8(iv).
Question 2: Whether the provision of Section 393(1) Table 8(iv) applicable even if the benefit or perquisite is paid in cash?
Answer: Yes, the provisions of Section 393(1) Table 8(iv) shall be applicable even if the benefit or perquisite is paid in cash because the benefit or perquisite may be in cash or in kind or partly in cash or partly in kind, as per 1st proviso of the section.
Question 3: Whether amount of benefit or perquisite will cover the capital asset?
Answer: Section 393(1) Table 8(iv) does not put at disadvantage on the nature of benefit or perquisite being provided. It is clarified that the benefit or perquisite may be a capital asset like car, land, etc. It would be considered as a benefit or perquisite in the hands of the recipient and shall accordingly be held liable to be taxable.
Question 4: Whether TDS is required to deducted on sales discounts, cash discount and rebates are benefit or perquisites?
Answer: Such discounts are permitted to customers from listed retail sale price, therefore, TDS is not required to be deducted. TDS under Section 393(1) Table 8(iv) is required to be deducted in the name of the recipient entity even though the benefits or perquisites may be used by the owner/director/employee of the recipient entity.
Question 5: How is the valuation of benefit or perquisite required to be carried out?
Answer: The valuation of benefit would be based on the fair market value of the benefit or perquisite, except where the benefit or perquisite provider had purchased or manufactured the said perquisite or benefit. However, GST will not be included for the purpose of valuation of benefit or perquisite.
Question 6: Whether reimbursement of the out-of-pocket expense incurred by the service provider in the course of rendering service is benefit or perquisite?
Answer: Yes, if the receipt of an expenditure is in the name of payer and paid by payee and taking reimbursement, then Section 393(1) Table 8(iv) will not be applicable as it’s a pure case of reimbursement and if payee is taking invoice in his name but paid by the payer, then it will be treated as benefit or perquisite and thus Section 393(1) Table 8(iv) will be applicable.
Question 7: How to compute threshold limit of Rs. 20,000 for FY 2026-2027?
Answer: The value or aggregate value of the benefit or perquisite provided during the financial year 2026-2027 shall be counted from April 01, 2026. Hence, if the value or aggregate value of the benefit or perquisite provided exceeds Rs. 20,000/- during the financial year 2026-2027 (including the period up to June 30, 2026), then section 393(1) Table 8(iv) shall be applicable on any benefit or perquisite provided on or after July 01, 2026.
Please note that the benefit or perquisite which has been provided on or before June 30, 2026, shall not be subjected to TDS under Section 393(1) Table 8(iv) of the Act.
Question 8: Have the permissible modes of tax payment been altered under the Income Tax Act,2025?
Answer: No. The modes for remittance of taxes remain unchanged under the Income Tax Act, 2025. Taxes are to be paid through authorised banking channels, including electronic payment mechanisms, as may be notified by the Government from time to time.
Question 9: Which Act will govern the TDS obligations during the transition period?
Answer: TDS obligations shall continue to be governed by the Act applicable to the financial year in which the sum is paid or credited. Accordingly, any sum paid or credited on or before 31st March, 2026 shall be governed by the provisions of the Income Tax Act, 1961. Further, any sum paid or credited on or after 1st April, 2026 shall be governed by the corresponding withholding provisions of the Income Tax Act, 2025.
OTHER POTENTIAL QUESTIONS:
| S. No. | Questions | Analysis |
|---|---|---|
| 1. | What is the due-date of TDS Statement in respect of benefit or perquisite? | CBDT may provide a different form for furnishing of TDS statement in respect to benefit or perquisite or may also merge it with the existing Form 140 which is a quarterly statement of deduction of tax. |
| 2. | What is the due-date of furnishing the certificate of TDS on benefit or perquisite to the deductee? | CBDT has not provided any due-date for furnishing the certificate of TDS on benefit or perquisite to the deductee but as per our analysis, the authority may provide the time period of 15 days from the due-date for furnishing the challan-cum-statement, as the same time period is given for other TDS certificates also. |
| 3. | Whether the provisions of Section 393(1) Table 8(iv) will cover all categories of benefits or perquisites? | CBDT has provided a broader picture of benefits or perquisites that will attract Section 393(1) Table 8(iv) but still, there is an ambiguity regarding hypothetical incomes. As per our interpretation and aim of the CBDT, Section 393(1) Table 8(iv) tries to cover a wider aspect of benefits or perquisites that will eventually cover all the benefits or perquisites. |
CONCLUSION:
Section 393(1) Table 8(iv) will affect professionals such as doctors, social media influencers, but experts say the rules won’t change for salaried employees as it is already covered under Section 392 of the Act. It can be seen that section 393(1) Table 8(iv) tries to widen the scope and varied nature of transactions which are arduous to envision. It will be riveting to see how the Government set in place various rules in this respect.
Hence, from now onwards, the taxpayers need to recognise transactions which are in the nature of benefits and perquisites and absorb the new TDS provisions.
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.
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