Corporate Gifts Association calls for Income Tax Act change that negatively impacts industry
Originally, this was introduced by the government to broaden the tax base and reduce tax evasion in the country. However, the Gifts Association now believes this has led many companies to avoid corporate gifts altogether.
According to Section 194R of the Income Tax Act, a person or company offering gifts, promotional materials or gift certificates worth more than Rs 20,000 shall deduct 10% TDS on recipient’s PAN card. In addition, it will be considered income in the hands of the beneficiary and will be taxed accordingly.
“We are all MSMEs (micro, small and medium-sized enterprises) and have an ancillary business of providing low-value gifts and promotional products to businesses,” said Shital Shah, president of CGAI. “Our survival is at stake because there is no other source of income. We are confident that our Indian government will hear our request and make changes to the current Section 194R. »
The Gift Makers Association has over 500 members across the country, including craft makers.
The industry believes this has discouraged several companies from offering freebies to their employees, customers, associates and other stakeholders. According to industry estimates, this has had a negative impact on the sector which has a turnover of Rs 40,000 crore and employees of around 2.50 lakh.
“The association has made representations to several ministers, including Union Finance Minister Nirmala Sitharaman, Union Trade and Industry Minister Piyush Goyal and Law and Justice Minister Kiren Rijiju,” Shah said. “We also plan to do more performances,” he said.