- Free or concessional housing loan, use of movable asset such as furniture and transfer of movable asset have, however, been retained for valuation of perquisite of the employee in Finance Act, 2005. The use of telephones and mobiles, on the other hand, continue to be exempted from the purview of being taxed as a perquisite.
- The value of benefit to the employee from the use of any movable asset other than laptops and computers would normally be determined at 10% per annum on actual cost of such asset or the rent payable by the employer.
- The value of benefit to the employee from the transfer of any movable asset would be equal to the actual cost of such assets to the employer as reduced by its normal wear and tear calculated at 10% of such cost for each completed year during which it was used by the employer. However, the rate of wear and tear for motor cars would be 20% and on computer and electronic items 50% by the reducing balance method, as per rule 3(7)(viii).
- The value of any other benefit or amenity or privilege provided by the employer would be determined on the basis of cost to the employer under an arm’s length transaction (excluding expenses on telephone incurred by the employer). Hence, before accepting any perquisite the employee must consider the tax impact.
Form No. 1 2BA containing the details of all the aforesaid taxable perquisites has to be issued to all employees to whom salary in excess of 1,50,000 p.a. is being paid.
It also contains a declaration by the employer about the value of perquisites and the taxable perquisites, etc.