PERQUISITES

PERQUISITES

Specified employee — Sec. 17(2)(iii)

• Director of the company or
• Employee having 20% or more voting power in the employer company or
• Employee having salary* more than Rs. 50000

* Salary means all taxable monetary benefit after deduction u/s 16

1. RENT FREE ACCOMMODATION

Unfurnished Accommodation
Government Employees As per govt. rules: Licenses Fees less  Rent recovered form employee	Other Employees			In Hotel 24% of salary or actual  charges whichever is less ** nothing taxable if  accommodation is provided not more than 15 days and on transfer of employee from one place to another
	Owned by employer		Not owned by employer (on lease or rent)
	As per 2001 census		As per 2001 census
	Population >25 lakhs 10 lakh < Population < 25 lakh Population up to 10 lakhs	15%** 10%** 7.5%**	Actual rent or 15% of salary whichever is lower

  The above is applicable only for unfurnished house

**% on amount of salary (less) Rent actually paid by employee

Furnished House

If the furniture (TV, washing machine) is provided then 10% p.a of cost of furniture or actual hire charges if taken on rent shall be added with unfurnished house.

Salary = basic salary + DA + bonus (current year) + commission + taxable portion of all allowance + monetary payment from employer other than PF (not include perquisites)

2. VALUATION OF PROVISION OF DOMESTIC SERVANTS

Servant appointed by	Servant’s salary paid by	Value of perquisite	Taxable in the hands of
Employee or Employer	Employee	Nil	Not applicable
Employee or Employer	Employer	Actual cost incurred by the employer on the servant	All employees

3. VALUATION OF SUPPLY OF GAS, ELECTRICITY OR WATER SUPPLIED BY EMPLOYER

Facility in the name of	Value of perquisite		Taxable in the hands of
	Provided from own source	Provided from outside
Employee	Manufacturing cost to the employer	Amount paid to the supplier	All employees
Employer	Manufacturing cost to the employer	Amount paid to the supplier	Specified employees

4. VALUATION OF EDUCATIONAL FACILITIES

Facility provided to	Value of perquisite		Taxable in the hand of
	Provided in the school owned by the employer	Provided in any other school
Children	Cost of such education in similar school (an exemption of Rs. 1000 p.m. per child is available)	Cost of such education (an exemption of Rs. 1000 p.m. per child is available)	Specified employee
Other house hold member	Cost of such education in similar school	Cost of such education incurred	Specified employee

5. VALUE OF LEAVE TRAVEL CONCESSION:

Any concession received by employee for himself or his family for travelling to any place in India is exempt to the extent of amount spent subject to the following conditions:

1. Exemption only for two journeys in a block of four years and out of two journeys exemption for one journey can be claimed in the calendar year succeeding the end of the block. [current block: 2010-13]
2. Exemption only for two children but exemption will be available for all children born before October 1, 1998

Amount of exemption

Situations	Amount of exemption
Where journey is performed by air	Amount of economy class air fare of the national carrier by shortest route or amount spent whichever is less
Where journey is performed by rail	Amount of air conditioned first class rail fare by the shortest route or amount spent whichever is less
Where the place of origin of journey and destination are connected by rail and journey is performed by any other mode of transport	Amount of air-conditioned first class rail fare by the shortest route or amount spent whichever is less.
Where the place of origin of journey and destination are not connected by rail
a) where a recognized public transport exists	First class or deluxe class fair by the shortest route or the amount spent whichever is less
b) where no recognized public transport exists	Air conditioned first class rail fare by shortest route or the amount spent whichever is less.

6. VALUE OF INTEREST FREE LOAN

* Calculate interest on the basis of SBI lending rates and interest paid by employee. The difference will be the value of perquisite

* Interest on maximum outstanding monthly balance of advance is considered to determine any concession in interest. Maximum outstanding monthly balance means balance of loan on the last day of each month.

* Nothing is taxable if –

- loans in aggregate do not exceed Rs 20,000 or

- loan is provided for a treatment of specified disease (Rule 3A) like neurological diseases, Cancer, AIDS, Chronic renal failure, Hemophilia (specified diseases).

SBI LENDING RATES

The details of interest rate as on 1st April, 2011 is available on www.statebankofindia.com.

7. VALUE OF PERQUISITE IN RESPECT OF MOVABLE ASSETS

Assets given	Value of benefits
a) Use of laptops and computers	Nil
b) Movable asset other than Laptops and computers	i. 10% p.a. of the actual cost of such asset, or ii. the amount of rent paid, or payable by the employer iii. Less: amount recovered from employee.

8. VALUE OF PERQUISITE IN RESPECT OF MOVABLE ASSETS SOLD TO EMPLOYEE

Assets transferred	Value of perquisites
Computers & electronics	Depreciated value of asset [depreciation is computed @50% on WDV for each completed year of usage] less: amount recovered from employee.
Motor cars	Depreciated value of asset [depreciation is computed @20% on WDV for each completed year of usage] less: amount recovered from employee.
Any other asset	Depreciated value of asset [depreciation is computed @10% on SLM for each completed year of usage] less: amount recovered from employee.

9. VALUE OF MEDICAL FACILITIES

The following shall not be treated as perquisite —

1. Medical treatment of the employee or his family (spouse and children, dependent - parents, brothers and sisters): —

• Provided in any hospital maintained by the employer.
• Any sum paid by the employer towards expenditure actually incurred by the employee in any hospital: —

— Maintained by employer or Government or Local Authority or any other hospital approved by Central Government for the purposes of medical treatment of its employees;

— Approved by the Chief Commissioner having regard to the prescribed guidelines in respect of prescribed diseases.

2. Premium paid by an employer by cheque to General Insurance Corporation to effect/keep in force:

• Insurance on the health of his employees.
• Medical Insurance Premia.

3. Any sum, not exceeding Rs.15,000 , paid to any hospital/nursing home/clinic other than(a & b)
4. Amount payable for treatment Outside India: —

• Medical expenses — to the extent permitted by RBI.
• If Gross Total Income (before including the travel expenditure) of the employee, does not exceed Rs. 2,00,000/-, then travel abroad for patient and one attendant — fully deductible. Stay abroad for patient and one attendant - permitted by RBI.

10. VALUE OF MOTOR CAR

Owned or hired by employer and used

Exclusively for official purpose	Exclusively for private purpose	Both official and Private Purpose
Nil. If specified documents maintained	Actual Running & Maintenance exp + remuneration of Chauffeur + actual Wear & tear @ 10% p.a of cost or hire charges if car taken on hire charges Less: amount recovered	Running and maintenance borne by * Employer Employee Up to 1.6 ltrs Rs. 1800 p.m + for chauffeur Rs. 900 p.m Up to 1.6 ltrs Rs. 600 p.m + for chauffeur Rs. 900 p.m Exceeding 1.6 ltrs Rs. 2400 p.m + for drivers Rs. 900 p.m Exceeding 1.6 ltrs Rs. 900 p.m + for drivers Rs. 900 p.m

* Nothing is deductible in respect of any amount recovered from the employee

Owned by employee and used

Exclusively for official purpose	Exclusively for private purpose	Both official and private purpose
Nil. If specified documents maintained	Actual expenditure incurred by employer (-) amount recovered from employee	Running and maintenance borne by
		Employer	Employee
		Actual expenditure (-) Rs. 900 p.m	No tax

1. Employer should maintain complete details of journey undertaken for official purpose, which includes date of journey, destination, mileage and amount of expenditure incurred thereon.
2. Certificate of supervising authority of the employee, wherever applicable, to the effect that the expenditure incurred for wholly and exclusively for performance of official duties, should be provided

MISCELLANEOUS

Free meals during office hours Free meal in remote area or offshore installation area is not taxable perquisite	Actual cost to the employer in excess of Rs.50 per meal or tea or snacks Less: amount recovered from the employee. (Tea or non-alcoholic beverages and snacks during working hours is not taxable)
Value of any gift or voucher or taken other than gifts made in cash or convertible into money (e.g. gift cheques) on ceremonial occasion	Value of gift. In case the aggregate value of gift during the previous year is less than Rs. 5,000, then it is not a taxable perquisite
Expenditure incurred on credit card or add on card including membership fee and annual fees	Actual expenditure to employer is taxable Less: amount recovered from Employee If it is incurred forofficial purpose and supported by necessary documents then it is not taxable.
Expenditure on club other than health club or sports club or similar facilities provided uniformly to all	Actual expenditure incurred by the employer Less: amount recovered from employee employees If the expenditure is incurred exclusively for official purposes and supported by necessary documents then it is not taxable. (Initial fee of corporate membership of a club is not a taxable perquisite)
Any other benefit or amenities or service or right or privilege provided by employer other than telephone or mobile phone	Cost to the employer Less: amount recovered from employee

PROVIDENT FUND

	Statutory provident fund	Recognized provident fund	Unrecognized provident fund	Public Provident Fund
Employer’s contribution to provident fund	Not taxable	Not taxable up to 12 per cent*of salary	Not taxable	Employer does not contribute
Employee’s contribution	Available deduction u/s 80C	Available deduction u/s 80C	Not available	Available deduction u/s 80C
Interest credited	Fully exempt	Exempt up to 9.5% (from 01.04.2001 onwards)	On Employee contribution - taxable under "income from other sources" On Employer contribution – not taxable at the time of credit.	Exempt from tax
Lump sum payment received at the time of retirement or termination of service or withdrawn	Exempt u/s. 10(11)	Exempt from tax u/s. 10(12) Subject to conditions: not taxable if employee retires after 5 years of service or due to inability of work. Otherwise treated as URPF	Employee’s Contribution exempt from tax & Interest thereon is taxable under the head of income from other sources. Employer’ s contribution and interest thereon is taxable as Profits in lieu of Salary, under" Salaries")	Exempt from tax u/s 10(11)

Notes:

• "salary" means basic salary. It includes dearness allowance if terms of employment so provide. It also includes commission when determined at a fixed percentage of turnover achieved by an employee.

APPROVED SUPERANNUATION FUND

• Employers contribution towards an approved superannuation fund is chargeable to tax in the hands of employees to the extent such contribution exceeds Rs. 1 lakh per year.
• Interest on accumulated fund balance is exempt from tax in employees hands.

Value of any specified security or sweat equity Shares allotted to employee

1. Specified Security means securities as defined in Section 2(h) of the Securities Contract (Regulation) Act and also includes Employees Stock Option Plan (ESOP).
2. Sweat equity shares means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in name of Intellectual Property Rights.
3. Perquisite will be taxable as the difference between the fair market value (FMV) of the shares on the date of exercise of the options less the exercise price.

Calculation of FMV on date of exercising the option

PARTICULARS	FMV
Listed on a recognized stock exchange	Average of opening and closing price on that date
Listed on more than one recognized stock exchanges	Average of opening & closing price of share on the recognised stock exchange which records the highest volume of trading in the share
If no trading in the share on any recognized stock exchange –
If share listed on a recognized stock exchange	Closing price of share on any recognised stock exchange on a date closest to date of exercising the option & immediately preceding such date
If share listed on more than one recognized stock exchanges	Closing price of share on a recognised stock exchange, which records highest volume of trading in such share.
If shares not listed on a recognised stock exchange or any specified security other than equity shares	Such value of share in the company as determined by a merchant banker on the specified date

Note:

• Where the stock exchange quotes both "buy" and "sell" prices, the opening or closing price shall be the "sell" price of the first settlement