The Central Board of Direct Taxes vide circular dated 13 September, 2022 has published FAQ to provide clarifications regarding deduction of tax at source under sections 194C and 194J. It is clarified that Deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements for actual expenses, out of pocket expenses and professional fees.
It is further clarified that the provision of section 194R is not applicable on benefit/perquisite provided by, an organization in scope of The United Nations (Privileges and Immunity Act) 1947, an international organization whose income is exempt under specific Act of Parliament (such as the Asian Development Bank Act 1966), an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign state.
The tax under section 194R of the Act is not required to be deducted on issuance of bonus or right shares by a company in which the public are substantially interested as defined in clause (18) of section 2 of the Act, where bonus shares are issued to all shareholders by such a company or right shares are offered to all shareholders by such a company.
