Description
This is a presentation about the tax implications on income from salary.
Salary" is the remuneration received by or accruing periodically to an individual for service rendered as a result of expressed or implied contract.
Compensation or remuneration even in the following circumstances is chargeable to Income-tax under the head Salaries': a) When due from the former employer or present employer in the previous year, whether paid or not. b) When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due. c) When arrears of salary are paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates. It is, therefore, clear that apart from current years salary, even advance salary and/or arrears of salary may be taxed in the year of receipt. More specifically and elaborately, the Income-tax Act has stipulated that salary includes :a) Salary, including advance/arrears of salary; b) Wages; c) Fees; d) Commission; e) Pension; f) Annuity; g) Perquisite; h) Receipts from Provident Fund chargeable to tax; Profit in lieu of or in addition to salary or wages; Gratuity; i) Contribution of employer to Recognized Provident Fund in excess of prescribed limit; Interest on credit balance of Recognized Provident Fund in excess of notified rates; i) Encashment of leave. definition of 'salary' is inclusive and not exclusive.
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No, payment can be taxed under this section unless the relationship of employer and employee exists between the payer and payee. The employer and employee relationship is the relationship of a master and servant, and it distinctly differs from that existing between a principal and agent. Primarily, the degree of control of the employer over the employee would be a deciding factor, as the agent is generally not under the complete Control and supervision of his principal. That is why even the emoluments received by an Member if Parliament/ M.L.A. are not taxable under the head "Salary" because of the absence of employer and employee relationship.
Section : 10(10) Type of Income : Gratuity. Eligible Assessee : An individual Limits : As per conditions specified in the section Conditions : Gratuity is exempted only when it is received on (a) retirement, or (b) becoming incapacitated prior to such retirement; or (c) resignation; or (d) termination or services.
Exemption is also available to gratuity received by the widow, children or dependants of the employee on his death. (A) Gratuity received by Government Employees or employees under Civil Services Fully Exempt from Tax. The Exemption is available even if the employee after leaving the Government services joins Private sector.
B) Gratuity received by Employees covered under the Gratuity Act
Minimum of the following three is exempt from tax:
1. 15 days’ salary* (denominator taken as 26 in case of monthly salary*) for every completed year**/part thereof in excess of 6 months, or 2. Rs. 3,50,000 (to be reduced by total exemption claimed in past years) *** 3. Amount actually received (C) Gratuity received by other employees Minimum of the following three is exempt from tax: 1. Half Month’s salary* for each completed year** of service (based on average salary* of 10 months immediately preceding month of retirement), or 2. Rs.3,50,000 (to be reduced by total exemption claimed in past years) *** 3. Amount actually received
** If gratuity not received from former employer then completed year of Service = total period of both the employers.
*** Rs. 3,50,000 is the maximum amount of exemption even if gratuity received in same previous year from more then one employer.
Section : 10(10A) Type of Income: Commuted pension Eligible Assessee : An individual Limits : As per conditions specified in the section
Pension is taxable as salary. Conditions : ? Government Employees (Commuted value of pension) - Fully exempt from tax ? Other Employees (Commuted value of pension) 1. If the employee has received gratuity then commuted value of 1/3rd of the pension is exempt from tax. 2. In any other case, commuted value of ½ of the pension is exempt.
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Any payment in commutation of pension received from fund set up by LIC u/s. 10(23AAB) is fully exempt. Judges of Supreme Court & High Court are entitled exemption of 50% of commuted pension
Section : 10(10AA) Type of Income: Leave encashment Eligible Assessee : An individual Limits : As per conditions specified in the Sec. Conditions : Encashment of earned leave while in service will be treated as income from salary. Salary paid to legal heirs of deceased employee in respect of privilege leave standing to his credit at the time of his death is not taxable. Leave Salary received by the family of Government employees who dies in harness, is not taxable in the hands of recipient. Encashment of earned leave on retirement, whether on superannuation or otherwise. Voluntary retirement by way or resignation would however, be exempt to the extent of least of: 1. 10 months salary* calculated on the basis of last 10 months average Salary; 2. Rs. 3,00,000 (to be reduced by total exemptions claimed in past years) 3. Cash Equivalent to earned leave not to exceed 30 days for every Completed year of actual service. 4. Actual Received.
Section : 10(10B) Type of Income: Retrenchment Compensation Eligible Assessee : An individual
Limits :
As per conditions specified in the section
In cases where the scheme is approved by the Central Government, the entire amount is exempt. In other cases, minimum of the following is exempt : (i) an amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947 (ii) Rs. 5,00,000 (iii) actual amount received.
Section :
Type of Income: Eligible Assessee : Limits :
10(10C)
Compensation for voluntary retirement An employee individual As per conditions specified in the section
Exemption is least of the following –
1.
2. 3. 4.
Actual Amount received
Rs. 5,00,000 (to be reduced by total exemptions claimed in the past years) Last drawn salary *3*months of fully completed years of service. Last drawn salary*Balance Nos. of months of service left The scheme of voluntary retirement should be framed as per Rule 2BA of the
Conditions :
Income Tax Rules.
Profits in lieu of salary” includes—
1.
2. 3.
4. 5.
The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; Any payment other than any payment referred to in clause of section 10 due to or received by an assessee from an employer or a former employer Any payment due to or received by an assessee from a provident or other fund , to the extent to which it does not consist of contributions by the assessee or [interest on such contributions. Any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Any amount due to or received, whether in lump sum or otherwise, by any assessee from any person either before his joining any employment with that person; or after cessation of his employment with that person
Allowance is a fixed monetary amount paid by the employer to the employee for meeting some particular expenses, whether personal or for performance of duties. These allowances are generally taxable and are to be included in gross salary unless a specific exemption is provided in respect of such an allowance. Allowances are fully taxable in all cases: ? City Compensatory allowances ? Fixed medical allowance ? Lunch/Dinner/Refreshment allowance ? Servant Allowance ? Dearness Allowance ? Project Allowance ? Overtime Allowance ? Interim Allowance ? Any other cash allowance
Allowances not charged to tax
1.
Allowances that are partially taxable
1. 2.
2. 3. 4.
Allowances to Government employees outside India Allowances to HC or SC judges Allowances paid by UNO Compensatory allowance received by a judge.
3.
House Rent Allowance Special Allowance – Allowances not taxable to the extent they are utilized for the purpose specified. Other special Allowances
Section : 10(13A) Type of Income: House rent allowance Eligible Assessee : An individual Limits : As per rule 2A Conditions : The least of the following is exempt from tax: 1. An amount equal to 50% of salary*, where residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40% of salary* where residential house is situated at any other place; 2. House rent allowance received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year; 3. The excess of rent paid over 10% of salary*.
*Salary for the purpose computing exemptions of Gratuity, HRA and Leave Encashment = Basic + Dearness allowance (forming part of retirement benefits) Commission based on the % of turnover (paid in course of employment) – Salaried employees drawing HRA up to Rs. 3000 p.m are exempted from production of rent receipt for the Purpose of TDS only
Following allowances are not taxable to the extent they are utilized for the purpose specified: 1. Traveling and Conveyance Allowance 2. Daily Allowance 3. Helper Allowance 4. Academic Allowance 5. Uniform Allowance
Special Compensatory Allowance in specified areas to extent specified.
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Tribal Area Allowances in specified states up to Rs. 200 p.m. Any Allowance granted to an employee working in any transport system for meeting his personal expenditure during his duty performed in the course of running of such transport from one place to another place, provided that such employee is not in receipt of daily allowance – up to 70% of allowance, maximum of Rs. 6,000 p.m. Children education allowance @ Rs. 100 p.m. per child, maximum of 2 children. Children hostel allowance @ Rs. 300 p.m. per child maximum of 2 children. Compensatory Field Area Allowance in specified areas @ Rs. 2,600 p.m. Compensatory modified field area allowance @ Rs. 1,000 p.m. Counter insurgency allowance @ Rs. 3,900 p.m. to members of armed forces.
• Transport Allowance granted to an employee to meet his expenditure for the purpose of Commuting between the place of his residence and the place of his duty @ Rs. 800 p.m. • Transport Allowance granted to an employee who is blind or orthopedic ally handicapped with disability of Lower extremities to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty @ Rs. 1,600 p.m. • Underground Allowance for employees in underground coal mines @ Rs.800 p.m. • High Altitude Allowance for members of armed forces operating in high altitude areas @ Rs. 1,060 p.m. for Altitude of 9000 to 15000 feet and @ Rs. 1,600 for altitude above 15000 feet. • Special Compensatory highly active field area allowance to members of armed forces @ Rs. 4,200 p.m. • Island duty Allowance to the member of armed forces @ Rs. 3250 pm.
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The term perquisites is generally understood to be a benefit or an amenity provided to the employees by the employer directly or indirectly whether in cash or in kind , in addition to salary and wages. Perquisites may be Taxable in hands of all employees Taxable only in hands of specified employees Not taxable in all cases.
1.
Value of rent-free accommodation provided to the assessee by his employer. [Section 17(2)(i)].
Value of concession in rent in respect of any accommodation provided to the assessee by his employer. Concession in the matter of rent shall be deemed to have been provided if a) the value of the accommodation (as determined under rule 3) exceeds the rent recoverable from/payable by the assessee (in case of unfurnished accommodation) b) The value of accommodation & value of furniture & fixtures (as determined under rule 3) exceeds the rent recoverable from/payable by the assessee (in case of furnished accommodation) c) The value of licence fees & value of furnitures & fixtures exceeds rent recoverable from/payable by the assessee and any charges paid/payable for furniture & fixtures by the assessee (in case of furnished accommodation provided by Central/State Government) [Section 17(2)(ii)] Amount paid by employer in respect of any obligation which otherwise would have been payable by Employee. [Section 17(2)(iv)]
2.
3.
4.
Amount payable by an employer, directly or indirectly, to effect an assurance on the life of the assessee or ,to effect a contract for an annuity, other than payments made to a recognized provident fund or an approved superannuation fund or a deposit-linked insurance fund established u/s 3G of the Coal Mines Provident Fund & Miscellaneous Provisions Act or u/s 6C of Employees’ Provident Fund & Miscellaneous Act. [Section 17(2)(v)].This perquisites are taxable on due basis even if the payment has not been actually been made by the employer during the previous year
Value of any other fringe benefit or amenity as prescribed. [Section 17(2)(VI)]
5.
(w.e.f. A.Y. 2006-07 the value of any other fringe benefit or amenity which may be prescribed shall Exclude those fringe benefits which are chargeable to tax under Chapter XII-H.)
Value of other benefits or amenities granted or provided free of cost or at concession rate are taxable only in the hands of the following specified employees; i.e.,
1. 2.
3.
Director-employee (even for a single day anytime during the previous year.) Employee having substantial interest in Employer Company (preferably 20% or more beneficial ownership even for a single day anytime during the previous year.) Employee drawing salary in excess of Rs. 50,000. (Income under the Salary Head by considering only actual monetary payments).
Medical treatment provided to an employee or any member of his Family (spouse, children and dependent brothers, sisters and parents will be exempt in following cases: 1. Treatment in a hospital (including dispensary or clinic or nursing home) maintained by the employer; 2. Treatment in any hospital maintained by the Government or any local authority or any other hospital approved by government for the purposes of medical treatment of its employees; 3. Treatment in respect of prescribed diseases or ailments in a hospital approved by the Chief Commissioner; Premium paid for Medical Insurance only under a Central Government approved scheme; 4. Reimbursement of Health Insurance premium paid by employee for self, spouse, children and dependent brothers, sisters and parents; 5. Reimbursement of amounts actually spent for medical treatment other than treatment referred to in (a), (b) and (c) above, not exceeding Rs. 15,000/- in the financial year; Actual expenditure on medical treatment outside India, including expenditure on travel and stay abroad of the employee or his family and also on travel and stay abroad of one attendant, to the extent permitted by RBI. Expenditure on travel abroad shall be excluded from perquisite only in case of employees whose gross total income before including the said expenditure is Rs. 2 lakhs or less.
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Perquisites allowed outside India by the Government to a citizen of India for rendering services outside India. 7. Sum payable by an employer to pension or deferred annuity scheme. 8. Employer’s contribution to staff group insurance scheme. 9. Rent-free official residence to a High Court or Supreme Court Judge. 10. Rent-free furnished residence to official of Parliament. 11. Conveyance facility to High Court/Supreme Court Judge. 12. Allotment of share, debentures or warrants to it employees under 13. ESOP on which FBT is payable.
6.
Rent-free unfurnished Accommodation (Rule 3)
1.
Central and State-Government employees. Equal to rent determined as payable by concerned employee in accordance with rules framed by Government for allotment of houses to its officers as reduced by the rent actually paid by the employee. Semi Government and private sector employees. Situated in cities having population exceeding 25 lakhs as per 2001 census 15% of salary (10% up to A.Y. 2005-06) Situated in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census – 10% of salary Situated in other places — 7.5% of salary — in respect of the period of occupying the accommodation by the employee as reduced by the rent actually paid by the employee. — actual rent or 15% of salary, whichever is lower as reduced by rent actually paid by the employee. Accommodation in a hotel (other than provided for a period not exceeding 15 days on the transfer) — lower of 24% of salary or actual hotel charges as reduced by rent actually paid by employee.
2. a. b. c.
For accommodation owned by employer
For accommodation taken on lease or rent
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Rent-free Furnished Accommodation Value the accommodation as if unfurnished and add: ? 10% per annum of the original cost of furniture if furniture is owned the employer; ? Actual hire charges (whether paid or payable), if furniture is hired the employer and reduce the rent actually paid by the employee.
by by
Furniture includes radio sets, television sets, refrigerators, air-conditioners and other household appliances.
Gas, Electricity or Water Supply Provided
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Where employer has supplied gas, electricity or water for household purposes from his own sources without purchasing from any outside agency, the value of such benefits is manufacturing cost incurred per unit. Where the employer has supplied gas, electricity or water for household purpose by purchasing from outside agency value is amount actually paid by employer.
Free Domestic Servants
Actual cost to employer in respect of free services of a sweeper, a gardener, a watchman or a personal attendant as reduced by the amount paid by an employee.
Free or Concessional Educational Facility
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Where educational institution itself is maintained and owned by employer and free educational facilities are provided to the children of the employee or where such free educational facilities are allowed in other educational institution by reason of his being in employment of that employer, then the perquisite value shall be the cost of such education in a similar institution in or near the locality provided the cost exceeds Rs. 1,000 per month per child as reduced by the amount paid by the employee and in other cases the value shall be the expenditure incurred by the employer. Direct payment by employer to the institution or reimbursement of education expenses of household members of employee is taxable in the hands of all employees. Scholarship – Scholarships paid by employer to employee gratuitously and at his sole discretion without any reference to the terms of employment for meeting cost of education of his children is exempt u/s 10(16).
A.
Standard deduction Withdrawn
Entertainment Allowance Only for Government Employees (least is exempt) Rs. 5000 20% of basic salary Actual
B.
i. ii. iii.
C.
Tax on Employment.
doc_749807439.ppt
This is a presentation about the tax implications on income from salary.
Salary" is the remuneration received by or accruing periodically to an individual for service rendered as a result of expressed or implied contract.
Compensation or remuneration even in the following circumstances is chargeable to Income-tax under the head Salaries': a) When due from the former employer or present employer in the previous year, whether paid or not. b) When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due. c) When arrears of salary are paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates. It is, therefore, clear that apart from current years salary, even advance salary and/or arrears of salary may be taxed in the year of receipt. More specifically and elaborately, the Income-tax Act has stipulated that salary includes :a) Salary, including advance/arrears of salary; b) Wages; c) Fees; d) Commission; e) Pension; f) Annuity; g) Perquisite; h) Receipts from Provident Fund chargeable to tax; Profit in lieu of or in addition to salary or wages; Gratuity; i) Contribution of employer to Recognized Provident Fund in excess of prescribed limit; Interest on credit balance of Recognized Provident Fund in excess of notified rates; i) Encashment of leave. definition of 'salary' is inclusive and not exclusive.
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?
No, payment can be taxed under this section unless the relationship of employer and employee exists between the payer and payee. The employer and employee relationship is the relationship of a master and servant, and it distinctly differs from that existing between a principal and agent. Primarily, the degree of control of the employer over the employee would be a deciding factor, as the agent is generally not under the complete Control and supervision of his principal. That is why even the emoluments received by an Member if Parliament/ M.L.A. are not taxable under the head "Salary" because of the absence of employer and employee relationship.
Section : 10(10) Type of Income : Gratuity. Eligible Assessee : An individual Limits : As per conditions specified in the section Conditions : Gratuity is exempted only when it is received on (a) retirement, or (b) becoming incapacitated prior to such retirement; or (c) resignation; or (d) termination or services.
Exemption is also available to gratuity received by the widow, children or dependants of the employee on his death. (A) Gratuity received by Government Employees or employees under Civil Services Fully Exempt from Tax. The Exemption is available even if the employee after leaving the Government services joins Private sector.
B) Gratuity received by Employees covered under the Gratuity Act
Minimum of the following three is exempt from tax:
1. 15 days’ salary* (denominator taken as 26 in case of monthly salary*) for every completed year**/part thereof in excess of 6 months, or 2. Rs. 3,50,000 (to be reduced by total exemption claimed in past years) *** 3. Amount actually received (C) Gratuity received by other employees Minimum of the following three is exempt from tax: 1. Half Month’s salary* for each completed year** of service (based on average salary* of 10 months immediately preceding month of retirement), or 2. Rs.3,50,000 (to be reduced by total exemption claimed in past years) *** 3. Amount actually received
** If gratuity not received from former employer then completed year of Service = total period of both the employers.
*** Rs. 3,50,000 is the maximum amount of exemption even if gratuity received in same previous year from more then one employer.
Section : 10(10A) Type of Income: Commuted pension Eligible Assessee : An individual Limits : As per conditions specified in the section
Pension is taxable as salary. Conditions : ? Government Employees (Commuted value of pension) - Fully exempt from tax ? Other Employees (Commuted value of pension) 1. If the employee has received gratuity then commuted value of 1/3rd of the pension is exempt from tax. 2. In any other case, commuted value of ½ of the pension is exempt.
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Any payment in commutation of pension received from fund set up by LIC u/s. 10(23AAB) is fully exempt. Judges of Supreme Court & High Court are entitled exemption of 50% of commuted pension
Section : 10(10AA) Type of Income: Leave encashment Eligible Assessee : An individual Limits : As per conditions specified in the Sec. Conditions : Encashment of earned leave while in service will be treated as income from salary. Salary paid to legal heirs of deceased employee in respect of privilege leave standing to his credit at the time of his death is not taxable. Leave Salary received by the family of Government employees who dies in harness, is not taxable in the hands of recipient. Encashment of earned leave on retirement, whether on superannuation or otherwise. Voluntary retirement by way or resignation would however, be exempt to the extent of least of: 1. 10 months salary* calculated on the basis of last 10 months average Salary; 2. Rs. 3,00,000 (to be reduced by total exemptions claimed in past years) 3. Cash Equivalent to earned leave not to exceed 30 days for every Completed year of actual service. 4. Actual Received.
Section : 10(10B) Type of Income: Retrenchment Compensation Eligible Assessee : An individual
Limits :
As per conditions specified in the section
In cases where the scheme is approved by the Central Government, the entire amount is exempt. In other cases, minimum of the following is exempt : (i) an amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947 (ii) Rs. 5,00,000 (iii) actual amount received.
Section :
Type of Income: Eligible Assessee : Limits :
10(10C)
Compensation for voluntary retirement An employee individual As per conditions specified in the section
Exemption is least of the following –
1.
2. 3. 4.
Actual Amount received
Rs. 5,00,000 (to be reduced by total exemptions claimed in the past years) Last drawn salary *3*months of fully completed years of service. Last drawn salary*Balance Nos. of months of service left The scheme of voluntary retirement should be framed as per Rule 2BA of the
Conditions :
Income Tax Rules.
Profits in lieu of salary” includes—
1.
2. 3.
4. 5.
The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; Any payment other than any payment referred to in clause of section 10 due to or received by an assessee from an employer or a former employer Any payment due to or received by an assessee from a provident or other fund , to the extent to which it does not consist of contributions by the assessee or [interest on such contributions. Any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Any amount due to or received, whether in lump sum or otherwise, by any assessee from any person either before his joining any employment with that person; or after cessation of his employment with that person
Allowance is a fixed monetary amount paid by the employer to the employee for meeting some particular expenses, whether personal or for performance of duties. These allowances are generally taxable and are to be included in gross salary unless a specific exemption is provided in respect of such an allowance. Allowances are fully taxable in all cases: ? City Compensatory allowances ? Fixed medical allowance ? Lunch/Dinner/Refreshment allowance ? Servant Allowance ? Dearness Allowance ? Project Allowance ? Overtime Allowance ? Interim Allowance ? Any other cash allowance
Allowances not charged to tax
1.
Allowances that are partially taxable
1. 2.
2. 3. 4.
Allowances to Government employees outside India Allowances to HC or SC judges Allowances paid by UNO Compensatory allowance received by a judge.
3.
House Rent Allowance Special Allowance – Allowances not taxable to the extent they are utilized for the purpose specified. Other special Allowances
Section : 10(13A) Type of Income: House rent allowance Eligible Assessee : An individual Limits : As per rule 2A Conditions : The least of the following is exempt from tax: 1. An amount equal to 50% of salary*, where residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40% of salary* where residential house is situated at any other place; 2. House rent allowance received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year; 3. The excess of rent paid over 10% of salary*.
*Salary for the purpose computing exemptions of Gratuity, HRA and Leave Encashment = Basic + Dearness allowance (forming part of retirement benefits) Commission based on the % of turnover (paid in course of employment) – Salaried employees drawing HRA up to Rs. 3000 p.m are exempted from production of rent receipt for the Purpose of TDS only
Following allowances are not taxable to the extent they are utilized for the purpose specified: 1. Traveling and Conveyance Allowance 2. Daily Allowance 3. Helper Allowance 4. Academic Allowance 5. Uniform Allowance
Special Compensatory Allowance in specified areas to extent specified.
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Tribal Area Allowances in specified states up to Rs. 200 p.m. Any Allowance granted to an employee working in any transport system for meeting his personal expenditure during his duty performed in the course of running of such transport from one place to another place, provided that such employee is not in receipt of daily allowance – up to 70% of allowance, maximum of Rs. 6,000 p.m. Children education allowance @ Rs. 100 p.m. per child, maximum of 2 children. Children hostel allowance @ Rs. 300 p.m. per child maximum of 2 children. Compensatory Field Area Allowance in specified areas @ Rs. 2,600 p.m. Compensatory modified field area allowance @ Rs. 1,000 p.m. Counter insurgency allowance @ Rs. 3,900 p.m. to members of armed forces.
• Transport Allowance granted to an employee to meet his expenditure for the purpose of Commuting between the place of his residence and the place of his duty @ Rs. 800 p.m. • Transport Allowance granted to an employee who is blind or orthopedic ally handicapped with disability of Lower extremities to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty @ Rs. 1,600 p.m. • Underground Allowance for employees in underground coal mines @ Rs.800 p.m. • High Altitude Allowance for members of armed forces operating in high altitude areas @ Rs. 1,060 p.m. for Altitude of 9000 to 15000 feet and @ Rs. 1,600 for altitude above 15000 feet. • Special Compensatory highly active field area allowance to members of armed forces @ Rs. 4,200 p.m. • Island duty Allowance to the member of armed forces @ Rs. 3250 pm.
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? 1. 2. 3.
The term perquisites is generally understood to be a benefit or an amenity provided to the employees by the employer directly or indirectly whether in cash or in kind , in addition to salary and wages. Perquisites may be Taxable in hands of all employees Taxable only in hands of specified employees Not taxable in all cases.
1.
Value of rent-free accommodation provided to the assessee by his employer. [Section 17(2)(i)].
Value of concession in rent in respect of any accommodation provided to the assessee by his employer. Concession in the matter of rent shall be deemed to have been provided if a) the value of the accommodation (as determined under rule 3) exceeds the rent recoverable from/payable by the assessee (in case of unfurnished accommodation) b) The value of accommodation & value of furniture & fixtures (as determined under rule 3) exceeds the rent recoverable from/payable by the assessee (in case of furnished accommodation) c) The value of licence fees & value of furnitures & fixtures exceeds rent recoverable from/payable by the assessee and any charges paid/payable for furniture & fixtures by the assessee (in case of furnished accommodation provided by Central/State Government) [Section 17(2)(ii)] Amount paid by employer in respect of any obligation which otherwise would have been payable by Employee. [Section 17(2)(iv)]
2.
3.
4.
Amount payable by an employer, directly or indirectly, to effect an assurance on the life of the assessee or ,to effect a contract for an annuity, other than payments made to a recognized provident fund or an approved superannuation fund or a deposit-linked insurance fund established u/s 3G of the Coal Mines Provident Fund & Miscellaneous Provisions Act or u/s 6C of Employees’ Provident Fund & Miscellaneous Act. [Section 17(2)(v)].This perquisites are taxable on due basis even if the payment has not been actually been made by the employer during the previous year
Value of any other fringe benefit or amenity as prescribed. [Section 17(2)(VI)]
5.
(w.e.f. A.Y. 2006-07 the value of any other fringe benefit or amenity which may be prescribed shall Exclude those fringe benefits which are chargeable to tax under Chapter XII-H.)
Value of other benefits or amenities granted or provided free of cost or at concession rate are taxable only in the hands of the following specified employees; i.e.,
1. 2.
3.
Director-employee (even for a single day anytime during the previous year.) Employee having substantial interest in Employer Company (preferably 20% or more beneficial ownership even for a single day anytime during the previous year.) Employee drawing salary in excess of Rs. 50,000. (Income under the Salary Head by considering only actual monetary payments).
Medical treatment provided to an employee or any member of his Family (spouse, children and dependent brothers, sisters and parents will be exempt in following cases: 1. Treatment in a hospital (including dispensary or clinic or nursing home) maintained by the employer; 2. Treatment in any hospital maintained by the Government or any local authority or any other hospital approved by government for the purposes of medical treatment of its employees; 3. Treatment in respect of prescribed diseases or ailments in a hospital approved by the Chief Commissioner; Premium paid for Medical Insurance only under a Central Government approved scheme; 4. Reimbursement of Health Insurance premium paid by employee for self, spouse, children and dependent brothers, sisters and parents; 5. Reimbursement of amounts actually spent for medical treatment other than treatment referred to in (a), (b) and (c) above, not exceeding Rs. 15,000/- in the financial year; Actual expenditure on medical treatment outside India, including expenditure on travel and stay abroad of the employee or his family and also on travel and stay abroad of one attendant, to the extent permitted by RBI. Expenditure on travel abroad shall be excluded from perquisite only in case of employees whose gross total income before including the said expenditure is Rs. 2 lakhs or less.
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Perquisites allowed outside India by the Government to a citizen of India for rendering services outside India. 7. Sum payable by an employer to pension or deferred annuity scheme. 8. Employer’s contribution to staff group insurance scheme. 9. Rent-free official residence to a High Court or Supreme Court Judge. 10. Rent-free furnished residence to official of Parliament. 11. Conveyance facility to High Court/Supreme Court Judge. 12. Allotment of share, debentures or warrants to it employees under 13. ESOP on which FBT is payable.
6.
Rent-free unfurnished Accommodation (Rule 3)
1.
Central and State-Government employees. Equal to rent determined as payable by concerned employee in accordance with rules framed by Government for allotment of houses to its officers as reduced by the rent actually paid by the employee. Semi Government and private sector employees. Situated in cities having population exceeding 25 lakhs as per 2001 census 15% of salary (10% up to A.Y. 2005-06) Situated in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census – 10% of salary Situated in other places — 7.5% of salary — in respect of the period of occupying the accommodation by the employee as reduced by the rent actually paid by the employee. — actual rent or 15% of salary, whichever is lower as reduced by rent actually paid by the employee. Accommodation in a hotel (other than provided for a period not exceeding 15 days on the transfer) — lower of 24% of salary or actual hotel charges as reduced by rent actually paid by employee.
2. a. b. c.
For accommodation owned by employer
For accommodation taken on lease or rent
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Rent-free Furnished Accommodation Value the accommodation as if unfurnished and add: ? 10% per annum of the original cost of furniture if furniture is owned the employer; ? Actual hire charges (whether paid or payable), if furniture is hired the employer and reduce the rent actually paid by the employee.
by by
Furniture includes radio sets, television sets, refrigerators, air-conditioners and other household appliances.
Gas, Electricity or Water Supply Provided
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Where employer has supplied gas, electricity or water for household purposes from his own sources without purchasing from any outside agency, the value of such benefits is manufacturing cost incurred per unit. Where the employer has supplied gas, electricity or water for household purpose by purchasing from outside agency value is amount actually paid by employer.
Free Domestic Servants
Actual cost to employer in respect of free services of a sweeper, a gardener, a watchman or a personal attendant as reduced by the amount paid by an employee.
Free or Concessional Educational Facility
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Where educational institution itself is maintained and owned by employer and free educational facilities are provided to the children of the employee or where such free educational facilities are allowed in other educational institution by reason of his being in employment of that employer, then the perquisite value shall be the cost of such education in a similar institution in or near the locality provided the cost exceeds Rs. 1,000 per month per child as reduced by the amount paid by the employee and in other cases the value shall be the expenditure incurred by the employer. Direct payment by employer to the institution or reimbursement of education expenses of household members of employee is taxable in the hands of all employees. Scholarship – Scholarships paid by employer to employee gratuitously and at his sole discretion without any reference to the terms of employment for meeting cost of education of his children is exempt u/s 10(16).
A.
Standard deduction Withdrawn
Entertainment Allowance Only for Government Employees (least is exempt) Rs. 5000 20% of basic salary Actual
B.
i. ii. iii.
C.
Tax on Employment.
doc_749807439.ppt