TDS · Section 194R · FY 2026–27
Section 194R: TDS on Benefits or Perquisites
Section 194R (TDS on Benefits or Perquisites): the TDS rate is 10%. Threshold: Rs. 20,000 aggregate per financial year per recipient. From 1 April 2026 the Income-tax Act, 2025 moves it to Section 393(1) Sl. 8(iv), with the same rate and threshold.
Section 194R requires deductors to apply 10% TDS on the value of any benefit or perquisite arising from a business or profession. Triggered by gifts, free products, sponsorships, and similar non-cash benefits provided to vendors/influencers/professionals.
Rate source: Income Tax Department TDS rate chart
10%
10%
Threshold
₹20K a year
Who deducts
Any person providing a business benefit/perk to a vendor or professional.
No PAN
20%
Shows up in
Form 26AS & AIS, quarterly
What it looks like on a real payment
Worked exampleSec 194R
Amount payable to you₹50,000
TDS @ 10%− ₹5,000
You receive₹45,000
The ₹5,000 is not lost — it is pre-paid tax, credited in your 26AS and adjusted at filing.
Value is the fair-market value of the benefit. For freelancers receiving free product samples for review, this applies if the cumulative value exceeds Rs. 20K/year.
Run your own numbersFree 194R calculator — invoice amount in, deduction and take-home out. No signup.What this means for you
The 10% on perks is recoverable at ITR if your effective rate is lower — but remember the perk value itself is taxable, so model both sides before assuming a refund.
194R matters to creators and influencers: if a brand gives you free products, gadgets, sponsored trips, or other non-cash perks worth more than Rs. 20,000 in a year, the brand must deduct 10% TDS on the fair-market value (often by collecting the cash from you or grossing it up). The perk value is also taxable as business income in your hands — s.26(2)(f) of the Income-tax Act 2025 from FY 2026-27 (formerly Section 28(iv)).
From 1 April 2026, the Income-tax Act 2025 renumbers this as Section 393(1) Sl. 8(iv). The rate and threshold are unchanged — only the citation moves.
When your client must deposit it — and report it
The client must deposit TDS by the 7th of the month after deduction (30 April for March). It reaches your 26AS only after they file the quarterly TDS statement (Form 26Q), due on these dates — which is why a deduction in March can be invisible until 31 May:
Form 26Q · quarterlyFY 2026–27
Q1 — Apr to Jun31 July
Q2 — Jul to Sep31 October
Q3 — Oct to Dec31 January
Q4 — Jan to Mar31 May
FAQ
What is the TDS rate under Section 194R?
Who deducts TDS under Section 194R?
What is the threshold for Section 194R TDS?
Is TDS under Section 194R deducted on the GST-inclusive amount?
How do I claim TDS deducted under Section 194R in my ITR?
Not sure how to claim this TDS back? Read the freelancer’s guide to TDS deducted by clients — how it lands in your 26AS and how you reclaim it in your ITR.
For the CA reading this
The deadline sheet you already send, with your name on it
Every statutory date for the month — GST returns, advance tax, and the dates your client's own customers owe them: when the TDS they withheld must reach the department, and when the certificate is due. Add your firm's name and forward it as it stands. No signup, no email, nothing to accept.
The image is the one that travels on WhatsApp. Dates are statutory, not advice — the sheet says which rows bind whom.
Sources
Rates as notified for FY 2026–27 and can change. General information, not tax advice. Verify with your CA before you file.
Related sections
Every deduction, tracked to the rupee
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