Tax Treatment of Perquisites Taxable in the hands of Specified Employees - for computing Salary Income |
1. Valuation of Provisions by the employer of Services of a Sweeper, a Gardener, a Watchman or Personal Attendant [Rule 3(3)] - for computing Salary income
The value shall be the actual cost to the employer i.e. the total amount of salary paid or payable by the employer or any other person on his behalf for such services as reduced by any amount paid by the employee for such services.
If the above servants are engaged by the employer and the facility of such servants are given to the employees it will be a perquisite for specified employees only. On the other hand, if these servants are employed by the employee and wages of such servants are paid or reimbursed by the employer, it will be a perquisite for all categories of employees. However, in both the cases the valuation of perquisites shall be done in the same manner as discussed above.
2. Value of benefit to the employee resulting from the supply of Gas, Electric Energy or Water for household consumption [Rule 3(4)] - for computing Salary income
The valuation is explained in the following chart:
Circumstances |
Value of benefit |
(a) Where such supply is made from resources owned by the employer without purchasing from the outside agency |
It shall be the manufacturing cost per unit incurred by the employer |
(b) In any other case |
Amount paid on this account by the employer to the agency supplying the gas, electric energy or water |
However, in both the above cases, if employee is paying any amount in respect of such services, the amount, so paid, shall be deducted from the value so arrived at.
Note :
If the gas, electricity/water connections are in the name of the employees and the expenses on the supplies are met by the employer, it is an obligation of the employee being discharged by the employer and therefore this perquisite is taxable in the hands of all employees. |
2. Valuation in respect of Free or Concessional Educational Facilities to any member of employees' household [Rule 3(5)] - for computing Salary income
Circumstances |
Value of benefit |
(a) Where the educational institution is itself maintained and owned by the employer |
The cost of education in a similar institution in or near the locality.
However, if educational facilities are provided to the children of the employee (any other member of the household not covered here), the value of this perquisite shall be NIL if the cost of such education or the value of benefit per child does not exceed ₹1,000 p.m.
[ Where cost of education exceeds ₹1,000 p.m. per child, the whole amount shall be taxable in the hands of the employee and no deduction of ₹1,000 p.m. shall be allowed. ] |
(b) Where free education facilities for such members of employees' household are allowed in any other educational institution by reason of his being in employment of that employer |
The cost of education in a similar institution in or near the locality.
However, if educational facilities are provided to the children of the employee (any other member of the household not covered here), the value of this perquisite shall be NIL if the cost of such education or the value of benefit per child does not exceed ₹1,000 p.m.
[ Where cost of education exceeds ₹1,000 p.m. per child, the whole amount shall be taxable in the hands of the employee and no deduction of ₹1,000 p.m. shall be allowed. ] |
However, in all the above cases, if any amount is paid or recovered from the employee on this account, the value of benefit computed above shall be reduced by the amount so paid or recovered.
Note :
1. Payment of fee by the employer directly to educational institution for the education of members of household including children or reimbursement of such fee to the employee shall be taxable in the hands of all employees.
2. Amount incurred by the employer for providing free education facility or training to an employee is not taxable.
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3. Valuation of Free or concessional journey given to the transport employees and their family members [Rule 3(6)] - for computing Salary income
Particulars |
Value of perquisite |
Provision of transport to the employee or to a member of his household by the employer who is engaged in the carriage of passengers or goods— |
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(a) in the case of employee of an airline or the railways |
Nil |
(b) in the case of any other employee: |
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(i) if provided free of cost |
Value at which such benefit or amenity is offered by such employer to the public |
(ii) if provided at concessional rate |
Reduce from the above value, the amount paid by or recovered from the employee for such benefit or amenity. |
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