Background and Legislative Intent
Section 28(iv) of the Income-tax Act, 1961 (the Act) was
introduced in the Finance Act, 1964 to tax the value of any benefit
or perquisite, whether convertible into money or not, arising from
the business or exercise of the profession by the assessee.
However, even after five decades, there was no mechanism available
to tax administrators to track whether such benefits and
perquisites were offered to tax by the recipients. In many cases,
the tax administrators claim that such benefits or perquisites are
not offered to tax.
To plug the lacuna in the law and to have an Audit Trail of the
benefit and perquisite received by the assessee, a new Section 194R
was inserted vide Finance Act, 2022 to provide for withholding tax
on the value of the benefits or perquisites.
