Direct Taxes - Salary (perquisite) .. [in progress]

Direct Tax –Salary – Perquisite

1.   Rent-free House :

a.  Govt. employees - Perquisite value is license fee.

b.  Non-govt. employees (if house owned by employer) – Perquisite value is 15% (for city’s population > 25 lakh), 10% (for city’s population between 10 to 25 lakh) and 7.5% (for city’s population < 10 lakh)

c.  Non-govt. employees (if house taken on lease by employer) – Perquisite value is 15% or lease rent whichever is lower.

d.  If furniture is also provided in house to govt. or non-govt. employee, 10% of the cost of furniture or annual rent of furniture (if any) paid by employer.

e.  Special  Cases : (i) No tax for house in remote area,  (ii) Hotel accommodation – 24% of salary or hotel tariff whichever is lower but it is tax-free for 15 days in case of transfer  (iii) Two rent-free houses in case of transfer – One of the house is tax-free for 90 days at the option of employee, (iv) Rent-free house is always tax-free in cases of Union Minister, Leader of Opposition in Parliament, official of Parliament, High Court or Supreme Court Judge, Chairman or member in UPSC.

2.  Free Domestic Servant/ Gas, electricity or water supplied after purchasing from outside                      agency : Perquisite taxable = Actual amount spent by employer minus Amount recovered.

3. Free educational facility : (i) If provided at outside – expenses incurred by the employer, (ii) If educational institution owned/maintained by employer – Up to Rs. 1,000/= per child is not taxable.

4. LTC – 2 journeys in block of 4 years is free based on actual expenditure for shortest route

5. Interest-fee/ Concessional loan: (i) Taxable @ SBI lending rate at maximum outstanding balance at the end of each month, (ii) Not taxable up to Rs. 20,000/= original loan, (iii) Loan given given in rule 3A for medical treatment of employee or his family is not taxable

6. Use of employer’s movable asset: (i) Taxable perquisite is 10% p.a. of actual cost of asset. (ii) Use of Computer/ laptop not taxable.

7. Sale of movable asset : (i) Taxable perquisite = Actual cost – normal wear & tear – Sale consideration, (ii) Normal wear & tear is 50% p.a  in case of Computer/ electronic item  and 20% p.a.in case of Car in both cases by reducing installment method whereas is 10% p.a. in case of other items.

8. Medical facility : Not taxable (i) If hospital is owned/maintained by employer, (ii) In case of govt. hospital or private hospitals approved/ recognized by govt. (iii) medical insurance premium paid or reimbursed by the employer, (iv) Up to Rs.15,000/- for medical expenses incurred or reimbursed by the employer in other cases, (v) For non-specified employees, (vi)For treatment outside India if a few conditions are satisfied.