• CURRENT EVENTS

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    Income under the Head Salary (Part 2)


    Perquisites (Sec. 17[2])

    Taxable in hands of all employees

    a.      Rent free furnished/unfurnished accommodation or House at concessional rent
    For govt. employee: License fees fixed by government + 10% of cost of furniture or hire charges – amount recovered from employee.

    For non. Government employee:
    Population
    Owned by employer
    Hired by employer
    If population is < 10 lakhs
    If population is >10 lakhs but < 25 lakhs
    If population is> 25 lakhs
    7.5% of salary
    10% of salary
    15% of salary
    Actual hire charges or 15% of salary whichever is less.
    If furnished
    Add 10% of cost or hire charges
    Add 10% of cost or hire charges
    If concessional house
    Deduct amount recovered from employee
    Deduct amount recovered from employee
    Hotel accomodation (more than 15 days)
    24% of salary
    24% of salary
    Meaning of salary
    Basic + DP + DA which enters + fee + commision of all types + statutory bonus + all fully taxable allowance + salary in lieu of leave for current year but does not include arrears advance perquisites, provident fund excess, gratuitous bonus.

    b.      Discharging of any monetary obligation of employees: gas and electricity bill, education of children, income tax professional tax, salary of domestic servance = actual expenses met by employer
    Life insurance premium = fully taxable
    Annual contribution to approved superannuation fund = in excess of Rs. 100000

    c.       Any other fringe benefits:
    Interest free loan or loan at concessional rate = Interest charged by SBI on similar loan – amount recovered from employee.

    Travelling, touring, accomodation, food or beverage facility = actual amount spent by employer – amount charged from employee

    Gift vouchers upto Rs. 5000 is exempted

    Credit card facility = total expenses – recovered from employee – used for official purpose

    Use of assets movable assets except computer or laptops= 10% of cost of assets (time basis)

    Transfer of movable assets (Depreciation charged on year to year basis i.e. 12 months) =
    Electronics = 50% p.a. on WDV basis
    Motor car or other conveyance = 20% p.a. on WDV basis
    Any other item = 10% p.a. on SLM basis

    Taxable in the hands of specified employees as define
    a.       Car facility

    Engine CC is upto  1.6 ltrs
    Engine CC is above 1.6 ltrs
    Car owned or hired by employer and expenses are met or reimburse by employer:
    a. Used for Official Purpose

    b. Used for Pvt. Purpose


    C. Used for both

    Car owned or hired by employer and expenses are met or reimburse by employer:
    Nil

    Actual expense+salary of driver+10% of cost of car – amount recovered form employee
    1800 p.m + 600 p. m. (salary to driver)
    Car owned or hired by employer and expenses are met or reimburse by employer:
    Nil

    Actual expense+salary of driver+10% of cost of car – amount recovered form employee
    2400 p.m + 900 p. m. (salary to driver)
    Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer:
    a. Used for Official Purpose

    b. Used for both pvt. And official purpose

    Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer
    No value to be taxed

    1800 p.m + 600 p. m. (salary to driver)
    Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer
    No Value to be taxed

    2400 p.m + 900 p. m. (salary to driver)
    Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
    a. Used for Official Purpose

    b. Used for both pvt. And official purpose

    Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
    No value to be taxed

    Actual expenditure – 900.

    Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
    No value to be taxed

    Actual expenditure – 900 p.m.
    Free use of car between office and residence
    No perquisite
    No perquisite
    Conveyance facility to high court and supreme court judges
    Exempted
    Exempted
    More than one car provided by employer
    One car @ Rs. 1800 p.m. + 600 p.m. and other car as deemed to be used for personal purpose and valued as mentioned above
    One car @ Rs. 1800 p.m. + 600 p.m. and other car as deemed to be used for personal purpose and valued as mentioned above

    b.      Domestic servants, Free or concessional use of gas, electricity & water: Value of perk = amount spent by employer – amount recovered from employee.

    c.       Free or concessional educational facilities
    Payment of fees : fully taxable for all employees
    Free education in employers own school or college:
    For employee’s own children: if fair cost of education is less than Rs. 1000 then value of perk is to be taken as nil and if fair cost of eduction is more than Rs. 1000 p.m.  then value of perk is = cost of employer – 1000 p.m.
    For employee’s household children: amount spent by employer – amount recovered from employee.

    d.      Free transport: Normal freight or fare chargeable from public – Amount recovered from employee

    e.      Medical facility: See Below

    Tax-free Perquisite

    a.       Medical facility or reimbursement of medical expenditure for self, family members and dependents is fully exempted if:
    1.       Facility provided in employers hospital
    2.       Reimbursement of treatment in private or unrecognised clinic up to Rs.15000
    3.       Treatment in government hospital
    4.       Medical insurance premium paid under any approved scheme
    5.       Health insurance premium paid under notified scheme (sec. 88D)
    6.       If treatment is taken outside india
    Expenses of stay and treatment with one attendent exempted upto amount allowed by RBI.
    Expenses of travelling with one attendent fully exempted if gross total income excluding such travelling expenses does not exceeds Rs. 200000

    b.      Refreshments: Free meals provided during office hours in business premises is exempt up to Rs.50 per meal

    c.       Computer, laptops, landline given for official purpose
    d.      Transfer of movable assets which are more than 10 years old without any consideration
    e.      Rent free house to MP, Union ministers, leader of opposition
    f.        Any Expenses incurred for employers own benefit
    g.       Contribution towards deffered annuity or pension scheme, group insurance scheme.
    h.      Interest free loan upto Rs. 20000 or loan taken for medical treatment
    i.         Goods sold at concessional rate or free ration to armed forces.

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