Tuesday, February 19, 2013

Income under the Head Salary (Part 2)


Perquisites (Sec. 17[2])

Taxable in hands of all employees

a.      Rent free furnished/unfurnished accommodation or House at concessional rent
For govt. employee: License fees fixed by government + 10% of cost of furniture or hire charges – amount recovered from employee.

For non. Government employee:
Population
Owned by employer
Hired by employer
If population is < 10 lakhs
If population is >10 lakhs but < 25 lakhs
If population is> 25 lakhs
7.5% of salary
10% of salary
15% of salary
Actual hire charges or 15% of salary whichever is less.
If furnished
Add 10% of cost or hire charges
Add 10% of cost or hire charges
If concessional house
Deduct amount recovered from employee
Deduct amount recovered from employee
Hotel accomodation (more than 15 days)
24% of salary
24% of salary
Meaning of salary
Basic + DP + DA which enters + fee + commision of all types + statutory bonus + all fully taxable allowance + salary in lieu of leave for current year but does not include arrears advance perquisites, provident fund excess, gratuitous bonus.

b.      Discharging of any monetary obligation of employees: gas and electricity bill, education of children, income tax professional tax, salary of domestic servance = actual expenses met by employer
Life insurance premium = fully taxable
Annual contribution to approved superannuation fund = in excess of Rs. 100000

c.       Any other fringe benefits:
Interest free loan or loan at concessional rate = Interest charged by SBI on similar loan – amount recovered from employee.

Travelling, touring, accomodation, food or beverage facility = actual amount spent by employer – amount charged from employee

Gift vouchers upto Rs. 5000 is exempted

Credit card facility = total expenses – recovered from employee – used for official purpose

Use of assets movable assets except computer or laptops= 10% of cost of assets (time basis)

Transfer of movable assets (Depreciation charged on year to year basis i.e. 12 months) =
Electronics = 50% p.a. on WDV basis
Motor car or other conveyance = 20% p.a. on WDV basis
Any other item = 10% p.a. on SLM basis

Taxable in the hands of specified employees as define
a.       Car facility

Engine CC is upto  1.6 ltrs
Engine CC is above 1.6 ltrs
Car owned or hired by employer and expenses are met or reimburse by employer:
a. Used for Official Purpose

b. Used for Pvt. Purpose


C. Used for both

Car owned or hired by employer and expenses are met or reimburse by employer:
Nil

Actual expense+salary of driver+10% of cost of car – amount recovered form employee
1800 p.m + 600 p. m. (salary to driver)
Car owned or hired by employer and expenses are met or reimburse by employer:
Nil

Actual expense+salary of driver+10% of cost of car – amount recovered form employee
2400 p.m + 900 p. m. (salary to driver)
Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer:
a. Used for Official Purpose

b. Used for both pvt. And official purpose

Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer
No value to be taxed

1800 p.m + 600 p. m. (salary to driver)
Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer
No Value to be taxed

2400 p.m + 900 p. m. (salary to driver)
Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
a. Used for Official Purpose

b. Used for both pvt. And official purpose

Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
No value to be taxed

Actual expenditure – 900.

Where any other vehile owned by the employee but expenses met or reimbursed by the employer:
No value to be taxed

Actual expenditure – 900 p.m.
Free use of car between office and residence
No perquisite
No perquisite
Conveyance facility to high court and supreme court judges
Exempted
Exempted
More than one car provided by employer
One car @ Rs. 1800 p.m. + 600 p.m. and other car as deemed to be used for personal purpose and valued as mentioned above
One car @ Rs. 1800 p.m. + 600 p.m. and other car as deemed to be used for personal purpose and valued as mentioned above

b.      Domestic servants, Free or concessional use of gas, electricity & water: Value of perk = amount spent by employer – amount recovered from employee.

c.       Free or concessional educational facilities
Payment of fees : fully taxable for all employees
Free education in employers own school or college:
For employee’s own children: if fair cost of education is less than Rs. 1000 then value of perk is to be taken as nil and if fair cost of eduction is more than Rs. 1000 p.m.  then value of perk is = cost of employer – 1000 p.m.
For employee’s household children: amount spent by employer – amount recovered from employee.

d.      Free transport: Normal freight or fare chargeable from public – Amount recovered from employee

e.      Medical facility: See Below

Tax-free Perquisite

a.       Medical facility or reimbursement of medical expenditure for self, family members and dependents is fully exempted if:
1.       Facility provided in employers hospital
2.       Reimbursement of treatment in private or unrecognised clinic up to Rs.15000
3.       Treatment in government hospital
4.       Medical insurance premium paid under any approved scheme
5.       Health insurance premium paid under notified scheme (sec. 88D)
6.       If treatment is taken outside india
Expenses of stay and treatment with one attendent exempted upto amount allowed by RBI.
Expenses of travelling with one attendent fully exempted if gross total income excluding such travelling expenses does not exceeds Rs. 200000

b.      Refreshments: Free meals provided during office hours in business premises is exempt up to Rs.50 per meal

c.       Computer, laptops, landline given for official purpose
d.      Transfer of movable assets which are more than 10 years old without any consideration
e.      Rent free house to MP, Union ministers, leader of opposition
f.        Any Expenses incurred for employers own benefit
g.       Contribution towards deffered annuity or pension scheme, group insurance scheme.
h.      Interest free loan upto Rs. 20000 or loan taken for medical treatment
i.         Goods sold at concessional rate or free ration to armed forces.