Representations on guidelines to be issued by CBDT for removal of difficulties on new TDS provisions on business perquisites (s.194R) and virtual digital assets (s.194S)

This has reference to new TDS provisions viz. sections 194R and 194S, introduced by Finance Act 2022 coming into effect from 1 July 2022 which will cast TDS obligation @ 10% on payment of business perquisites/benefits and @ 1% on payments for transfer of Virtual Digital Assets (VDA) to residents. Both provisions give power to CBDT to issue guidelines, with approval of Central Government, for the purpose of removal of difficulties in giving effect to those provisions. Furthermore, such guidelines shall be laid before both Houses of Parliament and be binding on both income-tax authorities and payers.

In this regard, we are pleased to submit herewith for your kind consideration, representations on issues giving rise to difficulties for the industry in discharging the above referred TDS obligation. The suggestions are divided into two parts viz. Part A covering issues on TDS u/s. 194S (VDA) and Part B covering issues on TDS u/s. 194R (Business perquisites). Clarity on these issues will help both the industry and the Government to provide certainty to taxpayers, reduce litigation and achieve the Government’s objective of increasing & widening the tax base.

On behalf of industry, we request the CBDT to kindly consider that implementing the new TDS provisions by factoring in guidelines will take time for incorporating them into software systems and manual processes. It is necessary to provide industry with sufficient lead time after issue of final guidelines to carry out such changes. Also, release of draft guidelines for public consultation before final notification will help both industry and Government to address any implementation issues or difficulties. Hence, it is recommended that a lead time of at least 6 months may be provided post issue of final guidelines and the effective date of new TDS provisions u/s. 194R & 194S may be deferred to that extent.