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India to introduce new tax rules for social media influencers, doctors

India to introduce new tax rules for social media influencers, doctors

Social media influencers and doctors in India will now be subject to Tax Deducted at Source (TDS) from July 1, for profits derived from businesses for sales promotion. The Central Board of Direct Taxes (CBDT) has issued recommendations on the applicability of the new provision. The Union Budget made a provision for TDS on income to prevent leakage of tax revenue by inserting a new section, 194R in the Income Tax Act, 1961. Any person who gives a benefit of more than 20,000 in a year to a resident, will have to pay TDS. 10 per cent, NDTV reported.

Kamlesh C Varshney, Joint Secretary in the Ministry of Finance, explained about the benefits which include free drug samples for doctors, free foreign flight tickets and business tickets of Indian Premier League (IPL) and many more. He stressed that these items should be disclosed while filing income tax returns and should not be hidden as they are not being sold.

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Section 194R is applicable to sellers who offer incentives other than discounts in cash or in any kind of car, computer, gold coin, mobile phone.

It gave a break for customers by exempting the segment from sales discounts or cash discounts, claiming it would hit sellers if included. However, if perquisites such as mobile were returned to the creator after being used for the purpose of the service like Social Media Influencer, then this new rule does not apply in such cases.

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The CBDT specifies that if doctors get free samples of medicines while working in a hospital, then Section 194R enforces free distribution of samples in the hospital. In case of doctors who work as consultants for a hospital and get free samples, TDS has to be first applied to the hospital which will deduct the required tax under section for doctors.

According to the CBDT, this section does not apply to benefits granted to a government institution which is not in business or profession, such as a government hospital.

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(with inputs from agencies)

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India to introduce new tax rules for social media influencers, doctors

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