Following
our discussion last week on allowances, this week we would focus on deductions available
for perquisites. The basic difference between perquisites and allowances is
that perquisites are non-cash benefits received from employer. The employee can
only enjoy the benefit of the same and not receive any cash for it.
The
details of perquisites benefits available under Sec 17 are as follows:
Details of sub section under
Section 17
|
Details of Perquisites
|
Taxable value of Perquisites
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2
(i)(ii)
|
Unfurnished rent
free accommodation
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A.
If House Property is owned by the employer:
·
15% of salary, if population of city where
accommodation is provided exceeds 25 lakhs as per 2001 census
·
10% of salary, if population of city where
accommodation is provided exceeds 10 lakhs but does not exceed 25 lakhs as
per 2001 census
·
7.5% of salary, if accommodation is provided in any
other city
B.
If House Property is taken on lease or rent by the employer, the perquisite
value shall be :
Lower
of following :
·
Lease rent paid or payable by the employer or
·
15% of the salary
*Salary
includes: Basic Pay + DA+ Bonus + Commission + Taxable allowances
|
2
(i)
|
Rent Free Furnished Accommodation
|
Add
10% to taxable value of unfurnished accommodation of original cost of
furniture and fixtures or actual charges paid
|
2
(i)
|
Furnished accommodation
in Hotel
|
The
accommodation should be due to work transfer and should be less than 15 days
in any financial year.
Lower
of following
·
Actual
cost paid or payable by employer
·
24
% of salary
|
2
(iii)
|
Services of a
domestic servant including sweeper, gardener, watchmen or personal attendant for specified
employees
|
Salary
paid to these domestic helpers less any amount charged on employee, would be
taxable perquisites
|
2
(iii)
|
Supply of gas,
electricity or water for house for specified employees
|
Value
of manufacturing cost per unit incurred by employer or amount paid to outside
agency, incase purchased by employers.
|
2
(iii)
|
Motor Car / Other
conveyance
|
·
The
basic decision of taxable perquisites for motor car depends upon whether the
vehicle is owned by employee or employer, who pays the maintenance costs and what
is the engine capacity. It further depends
if you are using the vehicle completely for official purposes or for personal
uses.
·
In
any case, if the vehicle is used only for official purposes, the perquisite
is completely tax exempt on maintenance of certain documents. For detailed
info, please contact your CA
|
2 (iii)
|
Education Facilities
|
In
school owned by employer or any other school, cost of school fess less Rs.1000
per child is taxable
For
any reimbursement received towards fees, training is completely taxable.
|
2
(vi)
|
ESOP/ Sweat Equity
Shares
|
Fair
Market value of the shares less the amount paid by employee to acquire them
Fair
market price is average of opening and closing on date of exercise of option.
|
2
(viii)
|
Interest free Loan
or concessional rate
|
· Find out the outstanding monthly
balance
· Find out rate of interest charged
by the SBI in respect of loan for the same purpose advanced by it;
· Calculate interest for each month
of the previous year on the outstanding amount at the above rate of interest.
|
2
(viii)
|
Food and beverages
provided by employer
|
Meals beyond Rs 50 per meal are
fully taxable
It does not include :
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
c)
Food
in office premises or through non-transferable paid vouchers usable only at
eating joints provided by an employer if cost to the employer is Rs. 50(or
less) per meal.
|
The remaining perquisites would be covered in the coming week of the write up.
