New Delhi: From July, a 10 per cent tax deducted at source (TDS) on freebies received from businesses for sales promotion will apply to social media influencers and doctors. The new TDS rule will take effect from July 1 and the Central Board of Direct Taxes (CBDT) has put out a set of guidelines in this regard.
The provision was introduced in the Finance Act of 2022 to widen the tax base and to ensure that those who benefit from such sales promotion expenditure by businesses report it in their tax returns and also pay tax. For social media influencers, paying the TDS amount will be a must if the equipment given for them as part of marketing efforts by a company is retained by the person. However, the CBDT clarified that TDS will not apply if the equipment is returned to the company.
“Whether this (the product given for sales promotion activity in social media) is benefit or perquisite will depend upon the facts of the case. In case of benefit or perquisite being a product like car, mobile, outfit, cosmetics etc. and if the product is returned to the manufacturing company after using for the purpose of rendering service, then it will not be treated as a benefit or perquisite for the purposes of section 194R of the Act (the TDS provision),” the CBDT noted.
On the other hand, if it is kept by the individual, then it will be in the nature of benefit or perquisite and tax is required to be deducted accordingly under section 194R of the Act.
