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Today I have brought a new post in front of you on a new topic.
In today's post, I want to give you some information about income tax. Today I am just talking about some allowance of salary. And the rest I will tell you in my next post.
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Income From Salary
B. |
Perquisites |
||
39. |
17(2)(i)/(ii) read
with Rule 3(1) |
Rent free
unfurnished accommodation provided to Central and State Government employees |
License fees
determined in accordance with rules framed by Government for allotment of
houses shall be deemed to be the taxable value of perquisites. |
40. |
17(2)(i)/(ii) read with Rule 3(1) |
Unfurnished rent free accommodation provided to other employees |
Taxable value of
perquisites i. If house property
is owned by the employer, the taxable value of perquisite shall be: A. 15% of salary, if
population of city where accommodation is provided exceeds 25 lakhs B. 10% of salary, if
population of city where accommodation is provided exceeds 10 lakhs but does
not exceed 25 lakhs C. 7.5% of salary,
if accommodation is provided in any other city ii. If house
property is taken on lease or rent by the employer, the taxable value of
perquisite shall be: i. Lease rent paid
or payable by the employer or 15% of the salary, whichever is lower *Salary includes: a) Basic Pay b) Dearness
Allowance (only to the extent it forms part of retirement benefit salary) c) Bonus d) Commission e) All other allowances
(only taxable portion) f) Any monetary
payment which is chargeable to tax But does not include i. Value of any
perquisite ii. Employer’s
contribution to PF iii. Benefits
received at the time of retirement like gratuity, pension etc. Note: 1) Rent free
accommodation is not chargeable to tax if provided in remote area. 2) Rent free
accommodation provided to High Court or Supreme Court Judges, Union
Ministers, Leader of Opposition in Parliament, an official in Parliament and
Serving Chairman and members of UPSC is tax free perquisite. 3) The value so
determined shall be reduced by the amount of rent, if any, recovered
from the employee. 4) If employee is
transferred and retain property at both the places, the taxable value of
perquisites for initial period of 90 days shall be determined with reference
to only one accommodation (at the option of the assessee). The other one will
be tax free. However after 90 days, taxable value of perquisites shall be
charged with reference to both the accommodations. |
41. |
17(2)(i)/(ii) read
with Rule 3(1) |
Rent free furnished
accommodation |
Taxable value of
perquisites shall be computed in following manner: a) Taxable value of
perquisite assuming accommodation to be provided to the employee is
unfurnished b) Add: 10%
of original cost of furniture and fixtures (if these are owned by the
employer) or actual higher charges paid or payable (if these are taken on
rent by the employer). c) Less: The
value so determined shall be reduced by the amount of rent, if any, recovered
from the employee |
42. |
17(2)(i)/(ii) read
with Rule 3(1) |
Accommodation
provided in a hotel Hotel accommodation
will not be chargeable to tax if : a) It is provided
for a total period not exceeding in aggregate 15 days in the financial year;
and b) Such accommodation
in hotel is provided on employee’s transfer from one place to another place. |
Taxable value of
perquisite shall be lower of following: a) Actual
charges paid or payable by the employer to such hotel; or b) 24% of
salary |
43. |
17(2)(viii) read
with Rule 3(2) |
Motor Car / Other
Conveyance |
Taxable value of
perquisites (See Note 1
below) |
43A. |
17(2)(iv) |
Any sum paid by
employer in respect of any obligation of an employee |
Fully Taxable |
44. |
17(2)(viii) read
with Rule 3(3) |
Services of a
domestic servant including sweeper, gardener, watchmen or personal attendant
(taxable only in case of specified employee [See Note 4]) |
Taxable value of
perquisite shall be salary paid or payable by the employer for such
services less any amount recovered from the employee. |
45. |
17(2)(viii) read
with Rule 3(4) |
Supply of gas,
electricity or water for household purposes |
Taxable value of
perquisites: ➢ Manufacturing cost per unit incurred by the
employer., if provided from resources owned by the employer; ➢ Amount paid by the employer, if purchased
by the employer from outside agency Note: 1. Any amount
recovered from the employee shall be deducted from the taxable value of
perquisite. 2. Taxable in case
of specified employees only [See note 4] |
46. |
17(2)(viii) read
with Rule 3(5) |
Education Facilities |
Taxable value of
perquisites (See Note 2
below) |
47. |
17(2)(viii) read with Rule 3(6) |
Transport facilities
provided by the employer engaged in carriage of passenger or goods (except
Airlines or Railways) |
Value at which
services are offered by the employer to the public less amount
recovered from the employee shall be a taxable perquisite |
48. |
17(2)(v) |
Amount payable by
the employer to effect an insurance on life of employee or to effect a
contract for an annuity |
Fully Taxable |
49. |
17(2)(vi) read
with Rule 3(8)/3(9) |
ESOP/ Sweat Equity
Shares |
Fair Market value of
shares or securities on the date of exercise of option by the
assessee less amount recovered from the employee in respect of such
shares shall be the taxable value of perquisites. Fair Market Value
shall be determined as follows: a) In case of listed
Shares: Average of opening and closing price as on date of exercise of option
(Subject to certain conditions and circumstances) b) In case of
unlisted shares/ security other than equity shares: Value determined by a
Merchant Banker as on date of exercise of option or an earlier date, not
being a date which is more than 180 days earlier than the date of exercise of
the option. Note: The Finance Act,
2020 has deferred the taxation of perquisite in case of start-ups from date
of allotment to the earliest of the following three dates: 1. Expiry of 48
months from the end of the relevant assessment year; 2. Sale of such
shares by the employees; 3. Date on which
employee ceases to be employee of the start-up. The eligible
start-up shall accordingly, be required to deposit tax with the government
within 14 days of the happening of any of the above events (whichever is
earlier). However, Section
17(2)(vi) has not been amended, thus the income shall be computed in the year
in which shares are allotted but tax shall be paid in subsequent year. |
50. |
17(2)(vii) |
Employer’s
contribution towards superannuation fund |
Taxable in the hands
of employee to the extent such contribution exceeds Rs.1,50,000 |
51. |
17(2)(viii) read
with Rule 3(7)(i) |
Interest free loan
or Loan at concessional rate of interest |
Interest free loan
or loan at concessional rate of interest given by an employer to the employee
(or any member of his household) is a perquisite chargeable to tax in the
hands of all employees on following basis: 1) Find out the
“maximum outstanding monthly balance” (i.e. the aggregate outstanding balance
for each loan as on the last day of each month); 2) Find out rate of
interest charged by the SBI as on the first day of relevant previous year in
respect of loan for the same purpose advanced by it; 3) Calculate
interest for each month of the previous year on the outstanding amount
(mentioned in Step 1) at the rate of interest given in Step 2 4) From the total
interest calculated for the entire previous year (step 3), deduct interest
actually recovered, if any, from employee 5) The balance
amount (Step 3-Step 4) is taxable value of perquisite Nothing is taxable
if: a) Loan in aggregate
does not exceed Rs. 20,000; or b) Loan is provided
for treatment of specified diseases (Rule 3A) like neurological diseases,
Cancer, AIDS, Chronic renal failure, Hemophilia (specified diseases).
However, exemption is not applicable to so much of the loan as has been
reimbursed to the employee under any medical insurance scheme. |
52. |
17(2)(viii) read
with Rule 3(7)(ii) |
Facility of
travelling, touring and accommodation availed of by the employee or any
member of his household for any holiday |
a) Taxable value of
perquisite shall be expenditure incurred by the
employer less amount recovered from employee. b) Where such
facility is maintained by the employer, and is not available uniformly to all
employees, the value of benefit shall be taken to be the value at which such
facilities are offered by other agencies to the public. |
53. |
17(2)(viii) read
with Rule 3(7)(iii) |
Free food and
beverages provided to the employee |
1) Fully Taxable:
Free meals in excess of Rs. 50 per meal less amount paid by the employee
shall be a taxable perquisite 2) Exempt from tax:
Following free meals shall be exempt from tax: a) Food and
non-alcoholic beverages provided during working hours in remote area or in an
offshore installation; b) Tea, Coffee or
Non-Alcoholic beverages and Snacks during working hours are tax free
perquisites; c) Food in office
premises or through non-transferable paid vouchers usable only at eating
joints provided by an employer is not taxable, if cost to the employer is Rs.
50(or less) per meal. |
54. |
17(2)(viii) read
with Rule 3(7)(iv) |
Gift or Voucher or
Coupon on ceremonial occasions or otherwise provided to the employee |
a) Gifts in cash or
convertible into money (like gift cheque) are fully taxable b) Gift in kind up
to Rs.5,000 in aggregate per annum would be exempt, beyond which it would be
taxable. |
55. |
17(2)(viii) read
with Rule 3(7)(v) |
Credit Card |
a)
Expenditure incurred by the employer in respect of credit card used by the
employee or any member of his household less amount recovered from
the employee is a taxable perquisite b) Expenses
incurred for official purposes shall not be a taxable perquisite provided complete
details in respect of such expenditure are maintained by the employer |
56. |
17(2)(viii) read
with Rule 3(7)(vi) |
Free Recreation/
Club Facilities |
a) Expenditure
incurred by the employer towards annual or periodical fee etc. (excluding
initial fee to acquire corporate membership) less amount recovered from the
employee is a taxable perquisite b) Expenses
incurred on club facilities for the official purposes are exempt from tax. c) Use of
health club, sports and similar facilities provided uniformly to all
employees shall be exempt from tax. |
57. |
17(2)(viii) read
with Rule 3(7)(vii) |
Use of movable
assets of the employer by the employee is a taxable perquisite |
Taxable value of
perquisites a) Use of Laptops
and Computers: Nil b) Movable asset
other than Laptops, computers and Motor Car*: 10% of original cost of the
asset (if asset is owned by the employer) or actual higher charges incurred
by the employer (if asset is taken on rent) less amount recovered
from employee. *See Note
1 for computation of perquisite value in case of use of the Motor Car |
58. |
17(2)(viii) read
with Rule 3(7)(viii) |
Transfer of movable
assets by an employer to its employee |
Taxable value of
perquisites a) Computers, Laptop
and Electronics items: Actual cost of asset less depreciation at
50% (using reducing balance method) for each completed year of usage by
employer less amount recovered from the employee b) Motor Car: Actual
cost of asset less depreciation at 20% (using reducing balance
method) for each completed year of usage by employer less amount
recovered from the employee c) Other movable
assets: Actual cost of asset less depreciation at 10% (on SLM
basis) for each completed year of usage by employer less amount
recovered from the employee. |
59. |
17(2)(viii) read
with Rule 3(7)(ix) |
Any other benefit or
amenity extended by employer to employee |
Taxable value of
perquisite shall be computed on the basis of cost to the employer (under an
arm’s length transaction) less amount recovered from the employee. However, expenses on
telephones including a mobile phone incurred by the employer on behalf of
employee shall not be treated as taxable perquisite. |
60. |
10(10CC) |
Tax paid by the
employer on perquisites (not provided for by way of monetary payments) given
to employee |
Fully exempt |
61. |
10(5) |
Leave Travel
Concession or Assistance (LTC/LTA), extended by an employer to an employee
for going anywhere in India along with his family* *Family includes
spouse, children and dependent brother/sister/parents. However, family
doesn’t include more than 2 children of an Individual born on or after
01-10-1998. (Subject to certain
conditions) |
The exemption shall
be limited to fare for going anywhere in India along with family twice in a
block of four years: · Where journey is performed by Air –
Exemption up to Air fare of economy class in the National Carrier by the
shortest route · Where journey is performed by Rail –
Exemption up to air-conditioned first class rail fare by the shortest route · If places of origin of journey and
destination are connected by rail but the journey is performed by any other
mode of transport – Exemption up to air-conditioned first class rail fare by
the shortest route. · Where the places of origin of journey and
destination are not connected by rail: * Where a recognized
public transport system exists – Exemption up to first Class or deluxe class
fare by the shortest route * Where no
recognized public transport system exists – Exemption up to air conditioned
first class rail fare by shortest route. Notes: i. Two journeys in a
block of 4 calendar years is exempt ii. Taxable only in
case of Specified Employees [See note 4] |
62. |
Proviso to section
17(2) |
Medical facilities
in India |
a) Expense
incurred or reimbursed by the employer for the medical treatment of the
employee or his family (spouse and children, dependent – parents, brothers
and sisters) in any of the following hospital is not chargeable to tax in the
hands of the employee: i. Hospital
maintained by the employer. ii. Hospital
maintained by the Government or Local Authority or any other hospital
approved by Central Government iii. Hospital
approved by the Chief Commissioner having regard to the prescribed guidelines
for treatment of the prescribed diseases. b) Medical
insurance premium paid or reimbursed by the employer is not chargeable to
tax. However, the medical
facility is taxable only in case of Specified Employees [See note 4] |
63. |
Proviso to section
17(2) |
Medical facilities
outside India |
Any expenditure
incurred or reimbursed by the employer for medical treatment of the employee
or his family member outside India is exempt to the extent of following
(subject to certain condition): a. Expenses on
medical treatment – exempt to the extent permitted by RBI. b. Expenses on stay
abroad for patient and one attendant – exempt to the extent permitted by RBI. c. Expenditure
incurred on travelling of patient and one attendant- exempt, if Gross Total
Income (before including the travel expenditure) of the employee, does not
exceed Rs. 2,00,000. |
Read More :- Income From Salary ( Part 1)
Notes:
1. Motor Car (taxable
only in case of specified employees [See note 4] except when car owned by the
employee is used by him or members of his household wholly for personal
purposes and for which reimbursement is made by the employer)
S. No. |
Circumstances |
Engine Capacity up
to 1600 cc |
Engine Capacity
above 1600 cc |
1 |
Motor Car is owned or hired by the employer |
||
1.1 |
Where maintenances
and running expenses including remuneration of the chauffeur are met or
reimbursed by the employer. |
||
1.1-A |
Used wholly and
exclusively in the performance of official duties. |
Fully exempt subject
to maintenance of specified documents |
Fully exempt subject
to maintenance of specified documents |
1.1-B |
Used exclusively for
the personal purposes of the employee or any member of his household. |
Actual amount of
expenditure incurred by the employer on the running and maintenance of motor
car including remuneration paid by the employer to the chauffeur and
increased by the amount representing normal wear and tear of the motor car at
10% per annum of the cost of vehicle less any amount charged from
the employee for such use is taxable value of perquisite. |
|
1.1-C |
The motor car is
used partly in the performance of duties and partly for personal purposes of
the employee or any member of his household. |
Rs. 1,800 per month
(plus Rs. 900 per month, if chauffeur is also provided to run the motor
car) shall be taxable value of perquisite |
Rs. 2,400 per month
(plus Rs. 900 per month, if chauffeur is also provided to run the motor
car) shall be taxable value of perquisite |
Nothing is
deductible in respect of any amount recovered from the employee. |
|||
1.2 |
Where maintenances
and running expenses are met by the employee. |
||
1.2-A |
Used wholly and
exclusively in the performance of official duties. |
Not a perquisite,
hence, not taxable |
Not a perquisite,
hence, not taxable |
1.2-B |
Used exclusively for
the personal purposes of the employee or any member of his household |
Expenditure incurred
by the employer (i.e. hire charges, if car is on rent or normal wear and tear
at 10% of actual cost of the car, if car is owned by the
employer) plus salary of chauffeur if paid or payable by the
employer minus amount recovered from the employee. |
|
1.2-C |
The motor car is
used partly in the performance of duties and partly for personal purposes of
the employee or any member of his household |
Rs. 600 per month
(plus Rs. 900 per month, if chauffeur is also provided to run the motor
car) shall be taxable value of perquisite |
Rs. 900 per month
(plus Rs. 900 per month, if chauffeur is also provided to run the motor
car) shall be taxable value of perquisite |
Nothing is
deductible in respect of any amount recovered from the employee. |
|||
2 |
Motor Car is owned by the employee |
||
2.1 |
Where maintenances
and running expenses including remuneration of the chauffeur are met or
reimbursed by the employer. |
||
2.1-A |
The reimbursement is
for the use of the vehicle wholly and exclusively for official purposes |
Fully exempt subject
to maintenance of specified documents |
Fully exempt subject
to maintenance of specified documents |
2.1-B |
The reimbursement is
for the use of the vehicle exclusively for the personal purposes of the
employee or any member of his household (taxable in case of specified
employee as well as non-specified employee) |
Actual expenditure
incurred by the employer minus amount recovered from the employee |
|
2.1-C |
The reimbursement is
for the use of the vehicle partly for official purposes and partly for
personal purposes of the employee or any member of his household. |
Actual expenditure
incurred by the employer minus Rs. 1800 per month and Rs. 900 per
month if chauffer is also provided minus amount recovered from
employee shall be taxable value of perquisite. |
Actual expenditure
incurred by the employer minus Rs. 2400 per month and Rs. 900 per
month if chauffer is also provided minus amount recovered from
employee shall be taxable value of perquisite. |
3 |
Where the employee owns any other automotive conveyance and actual running and maintenance charges are met or reimbursed by the employer |
||
3.1 |
Reimbursement for
the use of the vehicle wholly and exclusively for official purposes; |
Fully exempt subject
to maintenance of specified documents |
Fully exempt subject
to maintenance of specified documents |
3.2 |
Reimbursement for
the use of vehicle partly for official purposes and partly for personal
purposes of the employee. |
Actual expenditure
incurred by the employer as reduced by Rs. 900 per month |
Not Applicable |
Read More :- Contents and Alteration of Articles Notes
2. Educational Facilities
Taxable only in the hands
of specified employees
Facility extended to |
Value of perquisite |
|
Provided in the
school owned by the employer |
Provided in any
other school |
|
Children |
Cost of such
education in similar school less Rs. 1,000 per month per child (irrespective
of numbers of children) less amount recovered from employee |
Amount
incurred less amount recovered from employee (an exemption of Rs.
1,000 per month per child is allowed) |
Other family member |
Cost of such
education in similar school less amount recovered from employee |
Cost of such
education incurred |
2.1 Other Educational Facilities
Particulars |
Taxable Value of
Perquisites |
Reimbursement of
school fees of children or family member of employees |
Fully taxable |
Free educational facilities/
training of employees |
Fully exempt |
Read More :- Company Law ( Corporate Law Notes ) For B.com
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