Section 194R TDS
194RSince 1 July 2022, a brand providing a dealer in-kind benefits — including free scheme goods — worth over ₹20,000 in a financial year must deduct 10% TDS. When the benefit is wholly in kind, the brand pays the TDS itself.
Section 194R of the Income-tax Act requires anyone providing a business benefit or perquisite — free scheme goods, gold coins, foreign trips, bundled devices — to deduct 10% TDS once the value crosses ₹20,000 per recipient in a financial year. It took effect on 1 July 2022 and squarely covers brand-to-dealer scheme gifts.
When the benefit is wholly in kind, the brand must ensure the tax is paid before releasing the benefit — in practice the brand pays the TDS itself and the dealer sees the benefit value (and the TDS credit) reflected in Form 26AS. The dealer records the benefit as taxable business income.
For margin math, 194R belongs in the Net Landing Cost conversation as a cash-timing and reconciliation line — verify the TDS credited in 26AS matches 10% of the benefit value the brand declared — rather than as a straight margin loss.