According to new regulations from the Central Board of Direct Taxes (CBDT), social media influencers and medical professionals who receive free goods as part of sales campaigns must pay a 10% tax deducted at source (TDS) on those advantages.
On July 1, 2022, the new rules will go into force. The Finance Act of 2020 includes the instructions to increase the tax base and ensure that those who benefit from sales promotions record this in their tax returns and pay a 10 percent TDS on the value of the benefit.
In order to accommodate this, the government revised the Finance Act of 2022 by adding Clause 58, which aims to add Section 194R to the Act.
"The proposed new section provides that the person responsible for providing to a resident any benefit or prerequisite, whether convertible into money or not, arising from such resident's business or the practice of a profession, shall, before providing such benefit, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit at the rate of 10% of the value or aggregate of the value of such benefit.
In the case of doctors, CBDT indicated that Section 194R would apply to the delivery of free samples to the hospital if doctors were obtaining free samples of medications while working in a hospital.
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