This has reference to guidelines/clarifications to be issued by the Central Board of Direct Taxes (CBDT) for removal of difficulties in application of new withholding provision section 194R which comes into effect from 1 July 2022 in respect of which we have submitted our representations on 28 April 2022. This also has reference to recent press reports which suggest that CBDT officials are of the view that distribution of free medical samples to doctors will be liable to TDS under the new section
The attached representation seeks to put forth industry views why it may not be correct to clarify that distribution of free medical samples results in ‘benefit’ or ‘perquisite’ to doctors requiring TDS u/s. 194R and also bring forth practical challenges that the industry and doctors will face if any such clarification is issued. It is humbly requested that the CBDT should not impose such a burden on the industry. Rather it should be clarified that TDS u/s. 194R will not apply on free samples distributed in compliance with statutory guidelines
We also reiterate our request to the CBDT to kindly consider that implementing 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.