For person earning income from Salary , documents Form 16, and
Form 12BA provided by employer are needed. We looked into details of Form
16. Form 12BA give details of Perquisites given
by the employer to employee in the financial year. Before we look at Form 12BA
lets try to understand Perquisites, also known as perks.
What are Perquisites?
Perquisites
are benefits provided by the employers in addition to the normal salary at a
free of cost or concession rates. Income tax act defines Perquisite as any
casual emolument or benefit attached to an office or position in addition
to salary or wages. Value of these perquisites is added to the
income of employees. Hence Perquisites are taxable.
There are rules for valuation of perquisites. Some
of the perquisites are given below:
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2
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3
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Sweeper, gardener,
watchman or personal attendant
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4
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5
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6
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Holiday expenses
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8
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10
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12
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14
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15
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A perquisite can
be provided both by way as:-
·
Monetary payment : Employer
either reimburses the expenses incurred by the employee for such facilities or
pays on behalf of the employee. Ex:personal gas bills of the employee are in
the name of employee and the employer reimburses the amount of such gas bills
to him or pays on his behalf to the gas agency, it is in monetary terms and
taxable in case of all employees; on the other hand, if such bills are in the
name of employer, it will be perquisite in case of specified employee only.
·
Non-monetary payment/benefit : Payments
which can be called non-monetary payments are car facility, benefit on
account of interest-free loans, rent-free accommodation, furniture provided to
employees etc.
As
defined earlier, Perquisite as any
casual emolument or benefit attached to an office or position in addition
to salary or wages, Mostly perquisites are associated with
position or office. Often distinction is made between employees and specified employees. A Specified employee is the one who satisfies any of the
following cases:
·
He is a director of the company,
·
He has a substantial interest in the company, ie he is the
beneficial owner of equity shares carrying 20% of voting power in the employer
company.
·
His monetary income under the head “Salaries” for the year
exceeds Rs.24,000. The amount considered here includes amounts due from, paid
or allowed by one or more employers. It excludes all non-monetary benefits.
The perquisites and allowances, as aforesaid, shall
include accommodation (furnished or otherwise) or house rent allowance in lieu
thereof; house maintenance allowance together with reimbursement of expenses
and / or allowances for utilisation of gas, electricity, water, furnishing and
repairs; medical reimbursement; leave travel concession for self and family including dependents; medical insurance and such other
perquisites and / or allowances.
Perquisites and Indian Income tax Act
Definition of Perquisites: Perquisites are
defined in the section 17(2) of the Indian Income-tax Act of 1961.
Section 10(10CC) – Exemption on Non monetary perquisites: With effect
from 01.06.2002, employer has given a option to deposit the tax on non monetary
perquisites on behalf of employee without deducting the same from the employee
{section 192(1A) &192(1b)} As per section 10(10CC), the amount of tax
actually paid by an employer, at his option, on non-monetary perquisites on behalf
of an employee, is not taxable in the hands of the employee. Such tax paid by
the employer shall not be treated as an allowable expenditure in the hands of
the employer under section 40. The tax so paid by the employer shall be
deemed to be TDS made from the salary of the employee.
Statement of Perquisites: 192 (2C) lays down employer, shall
furnish to employee a statement giving correct and complete particulars
of perquisites or profits in lieu of salary provided to him and the value
thereof in form no. 12BA. The form and manner of such
particulars are prescribed in Rule 26A, Form 12BA and Form 16 of the Income-tax
Rules . Information relating to the nature and value of perquisites is to be
provided by the employer in Form no. 12BA in case of salary paid or payable is
above Rs.1,80,000/-. In other cases, the information would have to be provided
by the employer in Form 16 itself.
Type of perquisites, valuation
of perquisites are defined in every Finance Act (popularly known as Budget
presented by Finance Minister).
Valuation of Perquisites
Perquisites
are taxable in the hands of employees. There are rules for valuation of
perquisites. Let’s look at some of the rules. Please note that these rules
keeps changing and are notified by Central Board of Direct Taxes (CBDT).
For the financial year 2011-12 or Assessment Year 2012-13 Circular No.08/2010
dated 13.12.2010 . Valuation of some of the perquisites are discussed
below:
Accommodation :- For purpose of
valuation of the perquisite accomdation is divided into various categories
like: Rent free Unfurnished Accommodation, Rent-Free Furnished
Accommodation, Concession in Rent etc. is explained below:
Description
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Perquisite Value
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Where Government provides the accommodation
to a person holding an office or post in connection with the affairs of the Union or State or serving with any body or undertaking
under the control of such Government on deputation.
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Licence fee determined by Union
or State Government in respect of accommodation in accordance with the rules
framed by that Government.
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Where any other employer provides such
accommodation.
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Where accommodation is owned by
employer. Perquisite Value is -
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15% of the salary in cities having population more than
25 lakhs as per 2001 census.
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10% of the salary in cities having population more than
10 lakhs but up to 25 lakhs as per 2001 census.
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7.5% of salary in other cities.
Where accommodation is taken on lease or
rent by the employer. Perquisite Value is least of the following -
·
Actual amount of lease rental paid or payable by the
employer
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15% of the salary.
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Interested
readers can find about more about Taxable value of Rent-Free
Furnished Accommodation, Taxable value of Concession in
Rent
Gift or Voucher or Token: [Rule 3(7)(iv)]: The value of
any gift or voucher or token in lieu of which such gift may be received by the
employee or by member of his household on ceremonial occasions or otherwise
shall determined as equal to the amount of such gift.
However, where the
value of such gift, voucher or token, as the case may be, is below Rs.5,000 in
the aggregate during the previous year, the value of perquisite shall be taken
as Rs.Nil.
Medical Reimbursement by the employer exceeding Rs. 15,000/-
p.a. u/s. 17(2)(v) is to be taken as perquisites.
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Links to details about other perquisites from
website accounting-n-taxation are
given
Exempted Perquisites:- Some of
the perquisites are exempted from income tax (free) such as:
·
Tea, coffee(non-alcoholic beverages), snacks provided during
working hours.
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Free Meals provided at the office or business premises during
office hours or through paid non-transferable vouchers usable only at eating
joints. If the value is up to Rs.50 per meal, it is not taxable. Otherwise,
taxable. Assuming 2 meals per day and 22 working days in a month, it
works out to Rs. 2200/- p.m which at times is given in form food coupons
or Sodexo coupons.
·
Recreational facilities provided.
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Good manufactured by employer and sold by him to
employees at the concessional (not free) rates. Ex: Motorola providing his
employees Motorola mobiles at less than market value or Hindustan Lever giving
its products(Surf, Knorr soup) at lesser than market value.
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Amount spent on training of employee including the boarding and
lodging expenses of the employees on such a training.
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Telephone and mobile phone facility.
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Computer or laptop whether to use at home or office (ownership
is not transferred to employee)
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Loan given at nil or concessional rate of interest by the
employer provided the aggregate amount of loan does not exceed
20,000.
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Health club, sports facility.
