Exemption on interest

In the case of a home loan taken for a self-occupied property, the principal amount repaid up to Rs 1 lakh qualifies for deduction under Section 80C, while up to Rs 1.5 lakh of interest paid is tax-deductible under Section 24B.

However, in the case of a home loan for the second property, only interest payment is eligible for deduction. No tax benefit is available on the principal repayment of the second loan. However, the good part is that there is no limit on the deduction for interest payment on the second loan. This is because the second house has been given out on rent.

Download All in One Value of Perquisite Calculator in Excel

In case the house is yet to be constructed, 20% of the total interest paid during the preconstruction period is also allowed as the tax deduction. This is available for five years from the time the construction is complete till you get possession.

Deductions allowed on income from second home

Even if the second house is lying vacant, the Income Tax Department will consider that it has a rental value. The notional or deemed income (see How income is computed) will be added to your taxable income.

Sonu Iyer, tax partner, Ernst & Young, says, "A buyer can deduct expenses, such as municipal or property taxes actually paid, from the deemed income. Other than this, 30% of the net annual value, which is the difference between the rental income and municipal taxes, is also allowed as deduction. In case the house is rented out, 30% of the actual rent can be deducted from the taxable income, apart from deductions for local and municipal taxes."

After deducting such expenses from the income that you earn from the property, if you incur a loss, you have the option to set it off as follows:

The current year's loss will first be set off against any other income from the property.

. It can also be set off against other incomes, such as that from salary, business or profession, and capital gains, earned in the current year.

. If your balance continues to be in the red, you can carry forward the loss for up to eight years. However, the amount that is carried forward is only allowed to be set off against the income that is earned from a house.

How to save on taxes

If you own several houses, you can choose one as your primary residence. The income from this property will be treated as nil and exempt from tax, even if you have actually rented it out. It is for this house that the limit of Rs 1.5 lakh applies for deduction on loan interest.

The entire interest on the loan taken for the other house, the income from which is taxable, can be deducted from your income. This applies to any number of nonexempt houses that you may own.

So, to maximizes your savings, consider the house with the highest loan as the non-exempt one. However, make sure that the interest payment on this loan is higher than the principal-cum-interest payment on the other loan.

Additionally, if you give your second house on rent for more than 300 days in a year, it will not be subject to wealth tax, which is levied at the rate of 1% on wealth that is in excess of Rs 30 lakh.

If any of the houses is sold after three years, the profit will be taxable as long-term capital gains. However, there are beneficial provisions under which this gain is exempt from tax. So if you invest the money to construct a house within three years or buy another house within two years, your income will be tax-exempt.

However, the exemption is reversed and the amount taxed as capital gain if the new property is sold within three years of being constructed/purchased.

This will be considered a short-term gain and taxed according to your slab rates. You can also save tax if you invest the profit in a special bank account under the capital gain account scheme. A similar exemption is available for investments of up to Rs 50 lakh in bonds, which are redeemable after three years. This investment should be made within six months of the sale.

On August 23, 2016 by www.taxexcel.net

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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.

Download All in One TDS on Salary for Govt & Non-Govt employees for F.Y.2015-16 and A.Y.2016-17 [ This Excel Utility can prepare at a time Tax Compute Sheet + Automatic Arrears Relief Calculation with Form 10E + Automatic HRA Exemption Calculation + Automatic Form 12 BA + Automatic Form 16 Part A&B and Form 16 Part B + Individual Salary Structure for Govt and Non-Govt employees]

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:

1	Accommodation  [Download Accommodation Value Calculator]
2	Cars/Other automotive [ Download Value of other Perquisite Calculator]
3	Sweeper, gardener, watchman or personal attendant
4	Gas, electricity, water [ Download Value of Perquisite of Other calculator]
5	Interest free or concessional loans[ Download Loan Value Calculator]
6	Holiday expenses
7	Free or concessional travel [ Download Travel Value Perquisite Calculator]
8	Free meals  [ Download Value of Perquisite of meal calculator]
9	Free Education [ Download Value of Perquisite of education calculator]
10	Gifts, vouchers etc. [ Download Value of Perquisite of Gift calculator]
11	Credit card expenses [ Download Value of Perquisite of calculator]
12	Club expenses [ Download Value of Perquisite of l calculator]
13	Use of movable assets by employees [ Download Value of Perquisite of l calculator]
14	Transfer of assets to employees [ Download Value of Perquisite of meal calculator]
15	Value of any other benefit/amenity/service/privilege [ Download Value of Perquisite of  calculator]

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.

 OR

·                                 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	Perquisite Value
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.	Licence fee determined by Union or State Government in respect of accommodation in accordance with the rules framed by that Government.
Where any other employer provides such accommodation.	Where accommodation is owned by employer. Perquisite Value is - ·                                 15% of the salary in cities having population more than 25 lakhs as per 2001 census. ·                                 10% of the salary in cities having population more than 10 lakhs but up to 25 lakhs as per 2001 census. ·                                 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 ·                                 15% of the salary.

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.

·                                 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.

·                                 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.

·                                 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.

·                                 Amount spent on training of employee including the boarding and lodging expenses of the employees on such a training.

·                                 Telephone and mobile phone facility.

·                                 Computer or laptop whether to use at home or office (ownership is not transferred to employee)

·                                 Loan given at nil or concessional rate of interest by the employer provided the aggregate amount of loan does not exceed 20,000.

·                                 Health club, sports facility.

On September 08, 2015 by www.taxexcel.net

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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.

Download Automated Master of Form 16 Part B with Form 12 BA for FY 2014-15[ This Excel Utility can prepare at a time 50 employees Form 16 Part B with 12 BA]

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:

1	Accommodation  [Download Accommodation Value Calculator]
2	Cars/Other automotive [ Download Value of other Perquisite Calculator]
3	Sweeper, gardener, watchman or personal attendant
4	Gas, electricity, water [ Download Value of Perquisite of Other calculator]
5	Interest free or concessional loans[ Download Loan Value Calculator]
6	Holiday expenses
7	Free or concessional travel [ Download Travel Value Perquisite Calculator]
8	Free meals  [ Download Value of Perquisite of meal calculator]
9	Free Education [ Download Value of Perquisite of education calculator]
10	Gifts, vouchers etc. [ Download Value of Perquisite of Gift calculator]
11	Credit card expenses [ Download Value of Perquisite of calculator]
12	Club expenses [ Download Value of Perquisite of l calculator]
13	Use of movable assets by employees [ Download Value of Perquisite of l calculator]
14	Transfer of assets to employees [ Download Value of Perquisite of meal calculator]
15	Value of any other benefit/amenity/service/privilege [ Download Value of Perquisite of  calculator]

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.

 OR

·                                 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	Perquisite Value
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.	Licence fee determined by Union or State Government in respect of accommodation in accordance with the rules framed by that Government.
Where any other employer provides such accommodation.	Where accommodation is owned by employer. Perquisite Value is - ·                                 15% of the salary in cities having population more than 25 lakhs as per 2001 census. ·                                 10% of the salary in cities having population more than 10 lakhs but up to 25 lakhs as per 2001 census. ·                                 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 ·                                 15% of the salary.

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.

·                                 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.

·                                 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.

·                                 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.

·                                 Amount spent on training of employee including the boarding and lodging expenses of the employees on such a training.

·                                 Telephone and mobile phone facility.

·                                 Computer or laptop whether to use at home or office (ownership is not transferred to employee)

·                                 Loan given at nil or concessional rate of interest by the employer provided the aggregate amount of loan does not exceed 20,000.

·                                 Health club, sports facility.

On January 27, 2015 by www.taxexcel.net

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