13. Value of perquisite in respect of motor car provided by the employer (expenditure on running and maintenance of motor car are met by the employer)
This situation can further be classified as follows :
(1) Car is used for official purpose only.
(2) Car is used for private purpose only.
(3) Car is used for official as well as for private purposes.
The taxable value of perquisite in above cases will be computed as follows:
(1) If car is used wholly for official purpose:
Nothing is charged to tax, if conditions specified in note given below are satisfied.
Note: The employer has maintained complete details of journey undertaken for official purpose which should include date of journey, destination, mileage, amount of expenditure incurred thereon and the employer gives a certificate to the effect that such an expenditure was incurred wholly for performing official duty.
(2) If car is used wholly for private purpose of employee or any member of his household:
Value of perquisite will be computed as follows:
Particulars |
Amount (Rs.) |
Actual expenditure incurred or reimbursed by the employer |
XXXXX |
Add: 10% per annum of actual cost of car, if car is owned by the employer or actual hire charges, if car is hired by the employer |
XXXXX |
Less: Amount recovered from the employee |
XXXXX |
Value of perquisite (if positive) |
XXXXX |
(3) If car is used partly for private purpose of employee or any member of his household and partly for official purpose:
Value of perquisite will be computed as follows:
Value of perquisite will be calculated at the rate of Rs. 1,800 per month where the cubic capacity of the engine does not exceed 1.6 litres (i.e., 1600 cc) or Rs. 2,400 per month, if the cubic capacity of the engine exceeds 1.6 litres and Rs. 900 per month, if chauffeur is provided (nothing is deductible for amount recovered from the employee).
Illustration
The employer of Mr. Karan has provided him with a motor car for his personal use. The car was bought by the employer in December, 2010 for Rs. 8,40,000. Expenditures on running/maintenance of car (including the salary of driver) amounting to Rs. 5,000 per month are met by the employer. What will be the value of perquisite in this case?
**
The value of perquisite will be computed as follows :
Particulars |
Amount (Rs.) |
Actual expenditure incurred or reimbursed by the employer (@ Rs. 5,000 per month) |
60,000 |
Add: 10% per annum of actual cost of car (10% of Rs. 8,40,000) |
84,000 |
Less: Amount recovered from the employee |
Nil |
Value of perquisite |
1,44,000 |
14. Value of perquisite in respect of motor car provided by the employer (expenditure on running and maintenance of motor car are met by the employee) :
This situation can further be classified as follows :
(1) Car is used for official purpose only.
(2) Car is used for private purpose only.
(3) Car is used for official as well as for private purposes.
The taxable value of perquisite in above cases will be computed as follows:
(1) If car is used wholly for official purpose:
Nothing is charged to tax, if conditions specified in note given below are satisfied.
Note: The employer has maintained complete details of journey undertaken for official purpose which should include date of journey, destination, mileage, amount of expenditure incurred thereon and the employer gives a certificate to the effect that such an expenditure was incurred wholly for performing official duty.
(2) If car is used wholly for private purpose of employee or any member of his household:
Value of perquisite will be computed as follows:
Particulars |
Amount (Rs.) |
10% per annum of actual cost of car, if car is owned by the employer or actual hire charges, if car is hired by the employer plus salary paid to chauffeur by the employer, if any |
XXXXX |
Less: Amount recovered from the employee |
XXXXX |
Value of perquisite (if positive) |
XXXXX |
(3) If car is used partly for private purpose of employee or any member of his household and partly for official purpose:
Value of perquisite will be calculated at the rate of Rs. 600 per month, where the cubic capacity of the engine does not exceed 1.6 litres (i.e., 1600 cc) or Rs. 900 per month, if the cubic capacity exceeds 1.6 litres and Rs. 900 per month, if chauffeur is provided (nothing is deductible for amount recovered from the employee).
Illustration
Mr. Amit is working in Essem Ltd. The employer has provided him with a car (999 cc) along with driver. The car can be used for official purpose as well as for private purpose. The expenditure on running/maintenance (Rs. 8,400 per month) of the car is met by the employee. The car was purchased by the employer in December, 1999 for Rs. 2,52,000. What will be the value of perquisite in this case?
**
In this case, the car can be used for official as well as for private purpose and, hence, the value of perquisite will be calculated at the rate of Rs. 600 per month, where the cubic capacity of the engine does not exceed 1.6 litres (i.e., 1600 cc) or Rs. 900 per month, if the cubic capacity exceeds 1.6 litres and Rs. 900 per month, if chauffeur is provided (nothing is deductible for amount recovered from the employee).
The cubic capacity of the car is 999 cc and, hence, perquisite will be valued @ Rs. 600 per month. Driver is also provided by the employer and, hence, value of perquisite will come to Rs. 900 per month in respect of driver and, hence, the value of perquisite will come to Rs. 1,500 per month.
15. Value of perquisite in respect of perquisite arising on account of running and maintenance expenditure met or reimbursed by the employer in respect of any automotive conveyance (other than car) owned by the employee:
The value of perquisite in above case under different situations will be as follows :
(a) If the vehicle is used wholly for official purpose :
Nothing is charged to tax, if conditions specified in note given below are satisfied.
Note: The employer has maintained complete details of journey undertaken for official purpose which should include date of journey, destination, mileage, amount of expenditure incurred thereon and the employer gives a certificate to the effect that such an expenditure was incurred wholly for performing official duty.
(b) If the vehicle is used partly for private purpose of employee or any member of his household and partly for official purpose :
Value of perquisite will be computed as follows:
Particulars |
Amount (Rs.) |
Actual expenditure incurred or reimbursed by the employer |
XXXX |
Less: Rs. 900 per month [a higher amount can be deducted, if conditions specified in note given above are satisfied] |
XXXX |
Less: Amount recovered from employee |
XXXX |
Value of perquisite (if positive) |
XXXX |
Illustration
The employer of Mr. Kumar is reimbursing him the expenditure on two wheeler owned by the employee. The vehicle is used for official as well as for private purpose. The expenditure reimbursed by the employer amounts to Rs. 840 per month. What will be the value of perquisite in this case?
**
In this case, the vehicle is used partly for private purpose and partly for official purpose, thus, the value of perquisite will be computed as follows:
Particulars |
Amount (Rs.) |
Actual expenditure incurred or reimbursed by the employer |
840 |
Less: Rs. 900 per month |
900 |
Less: Amount recovered from employee |
Nil |
Value of perquisite (since value is not positive) |
Nil |
16. Value of perquisite in respect of provision of free or concessional meal by the employer
Value of perquisite in respect of food and other non-alcoholic beverages provided in office premises or through non-transferable paid vouchers usable only at eating joints will be as follows:
Particulars |
Amount (Rs.) |
Cost to the employer in respect of aforesaid items in excess of Rs. 50 per meal |
XXXXX |
Less : Amount recovered from the employee |
XXXXX |
Value of perquisite (if positive) |
XXXXX |
Nothing shall be charged in respect of:
(a) Food and other non-alcoholic beverages provided in working hours in remote area or in an offshore installation.
(b) Light refreshment (i.e., tea or non-alcoholic beverages and snacks) provided during working hours including working on holidays, overtime, etc.
Expenditure on provision of free meals in excess of Rs. 50 per meal is treated as perquisite - Circular No. 15/2001, dated December 12, 2001.
Illustration
The employer of Mr. Kumar is providing him free light refreshment (i.e., tea or non-alcoholic beverages and snacks) during the office hours. What will be the value of perquisite in this case?
**
Nothing shall be charged in respect of light refreshment (i.e., tea or non-alcoholic beverages and snacks) provided during working hours including working on holidays, overtime, etc. Thus, in above case nothing shall be charged to tax in the hands of the employee in respect of light refreshment provided by the employer during the office hours.
17. Value of perquisite in respect of provision of credit card by the employer
Value of perquisite arising on account of provision of credit card by the employer will be computed as follows :
Particulars |
Amount (Rs.) |
Expenditure incurred by the employer (See note) in respect of credit card used by the employee or any member of his household |
XXXXX |
Less: Amount recovered from the employee |
XXXXX |
Less: Expenditure incurred for official purposes (*) |
XXXXX |
Value of perquisite (if positive) |
XXXXX |
Note : Expenditure will include membership fees, annual fees incurred by the employee/member of his household, which is charged to a credit card (including add-on-credit card), provided by the employer or otherwise paid/reimbursed by the employer.
(*) Expenditure incurred on official purpose will be deducted only if:
(a) A complete detail of such an expenditure (including the date and nature of expenditure) is maintained by the employer; and
(b) Employer gives a certificate to the effect that such expenditure was incurred exclusively for performing official duty.
Illustration
The employer of Mr. Amit has provided him with a credit card. The card is used by Mr. Amit for his personal shopping. Total monthly bill of the card for the month of April, 2013 came to Rs. 8,400 which was paid by the employer. What will be the value of perquisite in this case?
**
Value of perquisite arising on account of provision of credit card by the employer will be computed as follows :
Particulars |
Amount (Rs.) |
Expenditure incurred by the employer in respect of credit card used by the employee or any member of his household |
8,400 |
Less: Amount recovered from the employee |
Nil |
Value of perquisite |
8,400 |
18. Value of perquisite in respect of provision of club facility by the employer
Value of perquisite arising on account of provision of club facility by the employer will be computed as follows :
Particulars |
Amount (Rs.) |
Expenditure incurred or reimbursed by the employer in respect of club facility used by the employee or any member of his household |
XXXXX |
Less: Amount recovered from the employee |
XXXXX |
Less: Expenditure incurred for official purposes |
XXXXX |
Value of perquisite (if positive) |
XXXXX |
Note :
(1) Expenditure incurred by the employer will include expenditure incurred or reimbursed by the employer in respect of club facility used by the employee or any member of his household or annual or periodical fees paid or payable to a club.
(2) Expenditure incurred on official purpose shall be deducted only if:
(a) A complete detail of such an expenditure (including date and nature of expenditure and its business expediency) is maintained by the employer; and
(b) Employer gives a certificate to the effect that such expenditure was incurred exclusively for performing official duty.
Nothing shall be charged to tax in respect of:
(a) Health club, sports and other facilities provided uniformly to all classes of employees by the employer.
(b) Initial one-time deposit or fees for corporate or institutional membership fees paid by the employer, where benefit does not remain with particular employee after cessation of employment - Circular No. 15/2001, dated December 12, 2001.
Illustration
Essem Ltd. provides free health club, sports and other facilities uniformly to all classes of its employees. Annual expenditure to the company in respect of this facility amounts to Rs. 8,40,000. There are 1,000 employees in the company. What will be the taxable value of perquisite in the hands of the employees in respect of above facility?
**
Nothing shall be charged to tax in respect of health club, sports and other facilities provided uniformly to all classes of employees by the employer. Thus, in the above case, nothing will be charged to tax in the hands of the employees of Essem Ltd. in respect of health club facility provided by the company.
19. Value of perquisite arising on account of gift given by the employer
Value of any gift, gift vouchers, etc., received from the employer by the employee or member of his household, shall be equal to the value of such gift. Nothing shall be charged to tax, if aggregate value of such gift, vouchers, etc., during the previous year does not exceed Rs. 5,000.
Illustration
During the year 2012-13, the employer of Mr. Kapoor gave him gifts worth Rs. 1,840. In this case what will be the taxable value of perquisite in the hands of Mr. Kapoor in respect of above gifts?
**
Nothing shall be charged to tax, if the aggregate value of such gifts vouchers, etc., during the previous year does not exceed Rs. 5,000. In this case, the aggregate value of gift is Rs. 1,840, and, hence, nothing will be charged to tax in the hands of Mr. Kapoor.
20. Value of perquisite arising on account of provision of free use of telephone by the employer
Nothing is taxed in respect of expenses on telephone including a mobile phone actually incurred by the employer on behalf of an employee. Hence, no perquisite will arise in respect of provision of mobile phone to the employee.
Illustration
The employer of Mr. Krunal has provided him with free use of telephone (mobile). The entire monthly telephone bill will be paid by the employer. What will be the taxable value of perquisite in this case?
**
Nothing is taxed in respect of expenses on telephone including a mobile phone actually incurred by the employer on behalf of an employee. Hence, in above case nothing will be charged to tax in the hands of Mr. Krunal.
21. Value of perquisite arising on account of provision of medical facility by the employer
Following are the provisions relating to valuation of perquisite in respect of medical facility provided (in India) by the employer to the employee or any family member (*) of the employee :
(*) Family member for this purpose means spouse/children of the employee, parents, brothers and sisters of the employee or any of them wholly or mainly dependent on the employee.
Nothing will be charged to tax in respect of medical facility provided in a hospital:
(a) Maintained by the employer,
(b) Maintained by the Government or local authority or other person but approved by Government for treatment of its employees,
(c) Approved by the Chief Commissioner having regard to the prescribed guidelines. In this case exemption is available only for treatment of prescribed diseases given in Rule 3A. A certificate from the hospital specifying nature of disease as well as amount of expenditure should be obtained.
(d) In respect of medical facility/expenses in any hospital other than discussed in (a) to (c) above, amount of expenditure incurred or reimbursed by the employer in excess of Rs. 15,000 (in aggregate per year) will be value of the perquisite charged to tax in the hands of employee.
Nothing is charged to tax in respect of group medical insurance premium for employees and their family members paid or reimbursed by the employer.
Illustration
During the year 2012-13, Mr. Kumar has incurred expenditure of Rs. 18,000 on account of purchase of medicines for the medical treatment of his family members (spouse and children). Entire amount of Rs. 18,000 was reimbursed by the employer. What will be the value of perquisite in this case?
**
In respect of reimbursement of expenses on account of medical treatment other than discussed in (a) to (c) above, amount of expenditure incurred or reimbursed by the employer in excess of Rs. 15,000 (in aggregate per year) will be value of the perquisite charged to tax in the hands of employee. Thus, in this case Rs. 3,000 (Rs. 18,000 – Rs. 15,000) will be the value of perquisite charged to tax in the hands of Mr. Kumar.
22. Value of perquisite arising on account of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer or former employer free of cost or at concessional rate to the employee
With effect from assessment year 2010-11, sub-clause (vi) of section 17(2) has been substituted with new sub-clause so as to include in the definition of perquisite the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer or former employer, free of cost or at concessional rate to the employee. Thus, if any of the above mentioned shares/securities are transferred by the employer to the employee on or after 1-4-2009, fair market value of such shares/securities on the date of exercise of the option, less amount recovered from the employee will be the taxable value of perquisite in the hands of the employee. It will be taxed in the previous year in which the shares are allotted or transferred to the employee.
Illustration
Mr. Kumar is working in Essem Ltd. The company offered an option to the employees to buy the shares of the company @ Rs. 100 per share. The current market price of the shares is Rs. 840 per share. In pursuance of the above offer, Mr. Kumar subscribed to 100 shares. Other details in this regard are as follows :
The fair market value of the share on the date of exercise of the option was Rs. 840 per share.
The fair market value of the share on the date of allotment of the shares was Rs. 840 per share.
What will be the taxable value of perquisite in respect of above shares issued by the company to Mr. Kumar?
**
In the above case, fair market value of shares on the date of exercise of the option, less amount recovered from the employee will be the taxable value of perquisite in the hands of the employee. The fair market value of the shares on the date of exercise of option is Rs. 840 and Rs. 100 is recovered from the employee, hence, value of perquisite will come to Rs. 740 per share. The employee has subscribed to 100 shares, and, hence, value of perquisite will come to Rs. 74,000 (Rs. 740 per share for 100 shares). |