TDS 194R – TDS on Perks like Travel vouchers, Gold Coins, Cars, Freebies

Do you sometimes give Gifts to your Customers ?

on Diwali ?

on Marriage Like Events ?

Good, now please remember to take their PAN number, and take TDS also from them if possible, or pay from your own pocket this TDS and deposit it by 7th of next month.

One more thing, if you think, you will hide it ? …… In that case the expense itself will be disallowed. for non deduction of TDS

This new section 194R requires deduction of tax at source @ 10%, by any person, providing any benefit or perquisite, exceeding Rs. 20,000 in value, in a year, to a resident, arising from the business or profession of such resident and such benefit or perquisite is in the nature of income falling under section 28(iv) of the Income tax Act.

Disallowance Provision – IT Act TDS on Perks and Gifts Section 194R

40(a)(ia) : In that case, 30% will be Disallowed.

Section 40(a) (ia)  says…… thirty per cent of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139

Note : Our this 194R is in Chapter XVII-B hence fully covered.

Example : Gift Given : Rs 50000 worth of Gold Coin. Dont want to Deduct TDS. Get this disallowed. And Pay Tax 22+sc+cess = 26% on the 30% of this coin = Rs 15000 x 26% = Rs 3900

so the Gold Coin is now costing not Rs 50,000, but Rs 53,900.

Penal Provision – TDS Rules

Plus, the implications under TDS rules, TDS non payment penalties, TDS interest, etc will continue…. there is no exemption, to that. That continues.

Effective from

The new provision part of the Finance Act 2022 will become effective from July 1.

Clarifications – TDS on Perks and Gifts Section 194R

CBDT. vide Circular No. 12/2022 dated 16.06.2022, issues guidelines for removing difficulties on implementation of Section 194R On guidelines on deduction of tax at source under.

The Central Board of Direct Taxes (CBDT) gave some clarifications

According to the guidelines, it is not necessary for the payer/deductor to check the taxability of the sum in the hands of the payee before deducting TDS by clearly distinguishing the principles governing TDS under Section 195 from the TDS under Section 194R.

1. It is made clear that the benefit or perquisite covered under Section 194R can be either in cash or in kind or partly in cash and partly in kind.
2. The nature of asset given as benefit or perquisite is not relevant and even capital assets given as benefit or perquisite are covered within the scope of Section 194R.
3. CBDT categorically uses the phrase ‘of whatever nature’ on benefit or perquisite for fastening TDS liability on the payer.

Section 194R will apply to seller giving incentives, other than discount or rebate, which are in cash or kind e.g., car, TV, computers, gold coin, mobile phone, sponsored trip, free ticket, medicine samples to medical practitioners. TDS on Perks and Gifts Section 194R

However, CBDT has provided a breather on sales discount, cash discount and rebates allowed to customer by excluding them from the purview of Section 194R as their inclusion would put the seller into difficulties. TDS on Perks and Gifts Section 194R

This law was enacted via Budget / Finance Act 2022

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Another Plastic Moulding company in Aurangabad Places order on Finsys

Optimizing the Purchase Module: A Guide for the Corrugation Industry

In the manufacturing sector, particularly the corrugation and paper industry, the Purchase Department is the most critical cost center. Managing thousands of tons of paper reels requires more than just manual entries; it requires a systematic, digital workflow.

The Finsys ERP Purchase Module is designed to transform these manual processes into a high-precision digital engine.

[Image: Digital dashboard showing real-time purchase order tracking and inventory levels]

1. The Power of Material Requirement Planning (MRP) – Purchase Module ERP for Corrugation Industry

A common challenge for factory managers is knowing exactly what to buy and when.

• Automated Calculations: Finsys ERP uses an MRP system that analyzes sales, production, and marketing data to calculate exact purchase quantities.

• Error Reduction: By relying on system-generated data instead of oral instructions, companies eliminate human error in quantity and specification.

2. Bulk PO vs. Individual Orders – Purchase Module ERP for Corrugation Industry

Paper industry procurement often follows two distinct paths:

• Bulk Purchase Orders: Establish large contracts with paper mills based on specific GSM, Width, and Burst Factor (BF). These help lock in rates and ensure long-term supply.

• Specific Orders: Generated for unique job cards or immediate shop-floor requirements.

3. Full-Proof Buying: The Workflow

To ensure accuracy, the Finsys Purchase Module follows a strict, system-driven SOP:

1. Approved Vendor List: Restrict buying to verified vendors to control quality and price.

2. Purchase Requisition (PR): Departments submit digital requests, which record the user ID and timestamp for total accountability.

3. Automated PO Generation: Rates are automatically fetched from pre-approved lists. This prevents unauthorized price hikes and “bill-booking” errors.

4. Multi-Level Approval: Senior management can review and approve Purchase Orders digitally before they reach the vendor. Purchase Module ERP for Corrugation Industry

4. Advanced Reporting & Monitoring

With over 50+ specialized reports, Finsys provides deep visibility into your supply chain:

• Pending PO Reports: Track which vendors have not yet fulfilled their orders.

• Reel Ageing & Stock Reports: Monitor how long raw material has been in the store to maintain FIFO (First-In-First-Out).

• Import PO Tracking: Specialized screens for international procurement that handle complex tax and shipping variables.

  

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Decisions to take for Finsys Server on Cloud

Good options as on 25-5-2022

Pricing and offer valid upto 31-7-2022

Micro setup ( 10 – 15 users ) with Main Exe, not using Cloud ERP

1. Shift to another Dedicated or Shared server on AWS – Need low power. Use Main Exe ? get this low cost solution for about Rs 4000 pm

Small /Medium setup ( 15 – 35 users ) with Main Exe,( Traditional VB Finsys), and not using Cloud ERP

Shift to a small Server with Free oracle ? Rs 8000 pm

Small/medium  setup ( 10 – 25 users ) with Web Exe

Shift to a small Server with Free oracle ? Rs 8000 pm

The Cloud Architecture as no loading of Software on your local computer. People work only via the Browser like Chrome, Safari, Internet Explorer, hence you need more RAM on the server, more processor speed on the server, thus more capacity on the server itself.

Large  setup ( 30-100 users ) with Web Exe ( on Finsys-Web only)

They must go for Twin Server | this is also Called Three Tier Architecture | First Tier is user on Browser | Second tier is the Application server | and Third Tier is the Database server

Option 1.  AWS : Shift to a large twin server with Free Oracle ? Rs 18000 pm.

Option 2 :  Shift to a large twin server on AWS with Paid Oracle.  Rs 18000 pm + Rs 374000 (one time) … Note for concurrent user count over 20, Oracle free version gives slow performance. And good performance needs Oracle “Paid” Edition. Finsys ERP Cloud Server Options

Option 3 : Shift to large twin server with inbuilt Oracle on Oracle cloud itself ( Rs 23000 pm ) approx dedicated

Option 4 : Shift to large twin server with inbuilt Oracle on Oracle cloud itself ( Rs 15000 pm ) approx “Shared”

For AWS lovers, Option  2 is the best.

And For Oracle Lovers, Option  3 is the best, if you can afford it. Finsys ERP Cloud Server Options

Searching other content ?

Benefits Of Shifting From On Premise Server To Cloud – either of AWS Cloud or Oracle Cloud or Microsoft Azure

Backup of Data on Google Drive / Cloud

Hardware requirements for Finsys ERP

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Reducing Financial Risk: Two Vital Tips for Safe Cheque Preparation

Managing a large volume of payments requires strict discipline and robust system controls. To build a stronger and safer financial system, Finsys ERP highlights two critical safety measures. Consequently, every accounts department should follow these steps to prevent fraud and costly errors.

[Image: A printed business cheque with a security cello-tape strip over the amount and name]

1. Enable the “Double Printing” Lock – Prevent Cheque Fraud and Double Printing

In a busy accounts office, it is very easy to print a cheque twice by mistake. This error often happens when you deal with recurring monthly bills from regular vendors.

• The Risk: Without a system lock, management might unknowingly sign two cheques for the same invoice. Therefore, this oversight leads to double payments and major financial loss.

• The Finsys Solution: Our ERP includes a feature that identifies if a cheque has already been printed. If a user tries to print it again, the system blocks the command and issues a warning.

• Next Step: You should contact the Finsys team to enable this control for your organization immediately.

2. Prevent Manipulation with Cello-Tape – Prevent Cheque Fraud and Double Printing

Cheques in transit are often vulnerable to sophisticated fraud. Modern laser printers use toner that unscrupulous parties can sometimes remove chemically.

• The Security Hack: You should always apply transparent cello-tape over the Payee Name and the Amount after printing.

• Why it Works: If someone tries to peel the tape or use chemicals to alter the ink, the paper will tear. In turn, the cheque becomes useless, which effectively prevents fraud.

• System Reminder: Finsys ERP provides a pop-up reminder asking: “Have you applied the cello-tape?”. This prompt ensures your team follows the Standard Operating Procedure (SOP) every single time.

Conclusion: Making Business Safer

Whether you use manual cheques or computer-generated ones, these small steps create a massive barrier against financial crime. By enforcing these Standard Operating Procedures (SOPs), you make your company more agile, secure, and ready for growth.

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