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Taxability Of Perquisites for Computing Salary Income

 

TAXABILITY OF PERQUISITES

(A) Exempted for All Employees

(B) Taxable for All Employees

(C) Taxable for Specified Employees Only

1. Free medical facilities as given u/s 17(2) (Proviso) (see details on next pages).

2. Free refreshments during working hours.

3. Free recreational facilities.

4. Provision of telephone whether basic or cellular exclusively for official use.

5. Free meals provided in remote area or at offshore installation are fully exempted.

6. Free education, training or refresher course for employees.

7. Leave Travel Concession if given twice in a block of 4 years.

8. Free ration received by members of armed forces.

9. Perquisites allowed by Government to its employees posted abroad.

10. Rent free house given to an officer of Parliament, a Union Minister, and leader of Opposition in Parliament.

11. Free residence and Conveyance facilities to Judges of Supreme Court and High Court.

12. Free conveyance provided by employer to employee for going to or coming from place of employment.

13. Any amount contributed by employer towards pension or deferred annuity scheme.

14. Employer’s contribution to staff group insurance scheme.

15. Computers, laptops givn to [not transferred] an employee for official/personal use.

16. Transfer of a moveable asset [computer, car or electronic items] more than 10 years old without consideration.

17. Accident insurance premium paid by employer for his own benefit.

18. Interest free loan or loan at concessional rate of interest taken by employee from employer if amount of loan does not exceed Rs. 20,000 or loan is taken for medical treatment.

19. Value of any shares or debentures given free of cost or at concessional rate to employees under stock option scheme approved by the Central Govt.

20. Tax on perks paid by employer.

21. Rent free accommodation given in remote or offshore areas.

  1. Rent free house.
  2. Concessional Rent House.
  3. Obligation of employee met by employer.
  4. Any amount of life insurance premium paid by employer on the life of employee during the previous year.
  5. Value of specified security or sweat equity shares allotted or transferred.
  6. Contribution to approved superannuation fund of the employee in excess of Rs. 1,00,000.
  7. Other fringe benefits
  8. Interest free or concessional loan.
  9. Travelling, Touring, Accommodation.
  10.  Food or beverages facility.
  11. Gift or Voucher or Token facility.
  12. Credit card facility.
  13. Club facility.
  14.  Use of movable assets.
  15.  Transfer of movable assets.

 

  1. Car, or any other automotive conveyance.
  2. Services of domestic servants including sweeper, watch-man, gardner, personal attendent provided by employer.
  3. Gas, water and electricity facility.
  4. Education facility for children.
  5. Free transport allowed by employer engaged in transport business.

CATEGORIES & TYPES OF PERKS

Perks can be divided into three categories

  • Perks exempted for all employees

  • Perks taxable for all employees

  • Perks taxable only for specified employees.

 
More.. Topics ... @ ' SALARY'
Salary-Definition & Meaning

Computation of Salary Income

Definition of Word ‘Salary’ [ Section 17(1)]

Section-15 : List of Incomes Chargeable to Income Tax under the head ‘ SALARIES’

Important Points / Characteristics for Computing Salary Income

Provident Fund

Treatment of Provident Funds (PF) for Computing Salary Income

Taxable Portion of annual accretion to RPF [Section 17(1)(vii)]. for Computing Salary Income

Transferred Balance from URPF to RPF [Section 17(1)(vii] for Computing Salary Income

Refund from Provident Fund [Section 17(3)(ii)] for Computing Salary Income

New Pension Scheme [ NPS] for Central Government and other Employees joining new jobs on or after 1-1-2004 for Computing Salary Income

 
Allowance [ Section 17(3)]

Allowance [ Section 17(3)] – for Computing ‘Salary’ Income

Fully Exempted Allowances for Computing ‘Salary’ Income

Fully Taxable Allowances for Computing ‘Salary’ Income

House Rent Allowance (HRA) for Computing ‘Salary’ Income

Allowances covered u/s 10 (14) for Computing ‘Salary’ Income

Meaning Of Salary For Different Purposes
PERQUISITES [Section 17(2)]

Meaning and Types of Perquisites [ Section 17(2)]

Taxability of Perquisites for Computing Salary Income

Perks Exempted From Tax for all Employees and not added in Salary Income

Rent Free House [Section 17(2)(i) Rule 3(1)]

Rules Regarding Calculation Of Value Of Rent Free House

Valuation Of Rent Free Accomodation (Unfurnished & Furnished)

Valuation of Rent Free Accommodation Provided as Concessional Rent [Sec. 17(2)ii)]

Obligation of Employee of Rent Free House met by Employer [Section 17(2)(iv)]

Sum payable by the Employer directly or through a fund to effect an assurance / an annuity [Section 17(2)(v)]

Any specified security or sweat equity shares allotted or transferred to employee [Section 17(2)(vi)] [ w.e.f. 1-4-2009]

Contribution to an Approved Superannuation Fund by the Employer [Sec. 17(2)(vii)]

Interest free or Concessional loan from employer [Rule 3(7)(i)]

Valuation of Perk in respect of Travelling, Touring, Accommodation

Food or Beverages Facility by Employer to Employee

Valuation of Perquisite in respect of Gift Voucher or Token

Valuation of Perquisite in respect of Credit Card

Valuation of Perquisite in respect of Club Facility

Use of Moveable Assets by Employer to Employee

Transfer Of Moveable Assets to the employee

Meaning of Specified Employee for Taxable Perquisites [Section 17(2)(iii) Rule 3]

Valuation of Perquisite of Motor Car or any Other Automotive Conveyance [Rule 3(2)]

Perquisite of Free domestic servants [Rule 3(3)]

Perquisite in respect of free supply of gas, electric energy, water supply [Rule 3(4)]

Free Educational Facilities to Children of Employee’s Household [Rule 3(5)]

Facility of Free or Concessional Private Journey to an employee by the employer engaged in the carriage of passengers or goods [Rule 3(6)]
PROFITS IN LIEU OF SALARY [17(3)]

Receipts treated as Profit in Lieu of Salary [ Section 17(3)]

Leave Travel Concessional (LTC) Assistance [Section 10(5)]

Death-Cum-Retirement Gratuity [Section 10(10)]

Non-Government employees receiving gratuity under payment of Gratuity Act, 1972 [POGA]

Non-Government Employees receiving gratuity (Not covered under payment of Gratuity Act)

PENSION [Monthly and Commuted] for Computing Salary Income

Leave Encashment [Section 10(10AA)] for Computing Salary Income

Any amount received as compensation on termination of employment [Section-10B]

Any amount received on voluntary retirement [Section 10(10C)]

Payment received from Recognised Provident Fund [Section 10(12)]

Any payment from Superannuation Fund [Section 10(13)]

 
DEDUCTIONS OUT OF GROSS SALARY [ Section-16]

Entertainment Allowance to Government Employees [Section-16(ii)]

Tax on Employment Under Section - 16(iii)

 
DEDUCTIONS U/S 80C OUT OF GROSS TOTAL INCOME

Section - 80C : Deductions from Gross Total Income (GTI) in case of Individual and HUF

Qualifying Amount ( Q.A.) for Deduction U/s 80C

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