What is TDS? Explain Section 194R & 194S?

The purpose of TDS is to collect taxes from the very source of income. Using this concept, a person (deductor) who makes payments of specified nature to another person (deductee) deducts tax at the source and remits it to the government.

Section 194R

The Finance Act, 2022, introduced Section 194R, which pertains to the deduction of tax on benefits or perquisites in respect of businesses or professions.

The purpose of introducing the new Section 194R is to plug the possibility of tax revenue leakages (tax evasions) in businesses or professions

Section 194S

With effect from 1st July 2022, the Finance Act, 2022 added a new section 194S. According to the new section, a person paying any sum to a resident as consideration for the transfer of a virtual digital asset (VDA) must deduct an amount equal to 1% of such sum as income tax. Tax deductions must be made at the time of crediting the sum to the resident's account or at the time of payment, whichever occurs first.