Perquisite Value

On this page:

  1. Perquisite Value of Interest Subsidy
  2. Perquisite Valuation of Travelling, Touring, Accommodation And Any Other Expenses
  3. Perquisite Valuation of Food
  4. Perquisite Valuation of Gift or Voucher or Token
  5. Perquisite Valuation of Expenses charged to Credit Cards
  6. Perquisite Valuation of Club Facilities
  7. Perquisite Valuation of Use of Movable Asset
  8. Perquisite Valuation of Transfer of any Movable Asset

Interest Subsidy [New Rule 3(7)(i)]

The following table gives the taxable value of interest subsidy provided by the employer during the previous year to the employee or the member of the household: -

Source Perquisite Value

Loan provided by the employer to all the employees at a concessional rate of interest or free of interest.

Interest subsidised by the employer for loan taken by him from outside source or for loan taken by the employee himself.

Interest subsidy is taxable based on the simple interest on the maximum outstanding monthly balance at the rate prescribed by State Bank of India for such loan as reduced by the interest recovered from the employee or any member of the household.

Not Taxable

However, no value of such interest subsidy is taxable, in the following cases: -

  1. Loans are made available for medical treatment in respect of diseases specified in Rule 3A. However, where any amount is reimbursed to the employee under any medical insurance scheme, then such portion of loan.
  2. Where the amount of loans are petty (not exceeding in aggregate Rs.20,000).

The "maximum outstanding monthly balance" [as per explanation (vii) to rule 3] means the aggregate outstanding balance for each loan as on the last day of each month.

"Interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised. [Section 2(28A)].

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Travelling, Touring, Accommodation And Any Other Expenses [Rule 3(7)(ii)]

The values of perquisites are as under: -

S.No Nature of Benefit Perquisite Value
1 Travelling, touring, accommodation and any other expense in relation to any holiday availed by the employee or any member of his household (other than the concession referred to in Rule 2B) Amount of expenditure incurred by the employer in that behalf.
2 Where such facility is maintained by the employer and is not available to all the employees. Value at which such facilities are offered by other agencies to the public.
3 Where the employee is on official tour and expenses are incurred in respect of any member of the household accompanying him. Amount of expenditure so incurred.
4 Where an official tour of an employee is extended as a vacation. Expenses incurred in relation to such extended period of stay or vacation.

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Taxable Perquisite Value of Food

The following table gives the taxable value of food provided by the employer during the previous year to the employee: -

S.No Nature of Benefit Perquisite Value
1. 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.
2. Free Meals in other cases Taxable.
3. Snacks, Coffee, Tea, Non-alcoholic Beverages provided during the office hours or to free meals during working hours provided in remote area (refer paragraph 22 above) or an offshore installation. Fully exempt.

Remote Area means an area located at least 40 kilometres away from a town having a population not exceeding 20,000 based on latest published all-India census. [Explanation (v) to Rule 3].

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Taxable Perquisite Valuation 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.

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Taxable Perquisite Valuation Expenses charged to Credit Cards [Section 3(7)(v)]

The following shall be taken to be the value of perquisite chargeable to tax, in respect of expenses charged to credit card: -

S.No Nature of Benefit Perquisite Value
1. Amount of expenses including membership fees and annual fees charged to a Credit Card (including any add-on card) Provided by the employer or otherwise, paid for or reimbursed by the employer.
2. Where such payment is incurred wholly and exclusively for official purposes and the following conditions are fulfilled:
  • Employer maintains complete details of such expenditure including date of expenditure and the nature of expenditure.
  • It is certified by the employer that such expenditure was incurred wholly and exclusively for the performance of official duties.
Not a perquisite.

Where the employee pays any amount for the above service, the same shall be reduced from the perquisite value determined above.

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Taxable Perquisite Valuation Club Facilities [Section 3(7)(vi)]

The following shall be taken to be the value of perquisite chargeable to tax, in respect of expenses charged to Club Facilities: -

S.No Nature of Benefit Perquisite Value
1. Amount of expenses including annual fees or periodical fees incurred in a club by the employee or any member of his household Value of benefit to the employee paid for or reimbursed by the employer.
2. In case such facilities are enjoyed by the employee or any member of the household out of Corporate membership obtained by the employer Value of benefit to the employee paid for or reimbursed by the employer, except "Initial Fee".
3. Where such payment is incurred wholly and exclusively for business purposes and the following conditions are fulfilled: -
  • Employer maintains complete details of such expenditure including date of expenditure, the nature of expenditure, and its business expediency.
  • It is certified by the employer that such expenditure was incurred wholly and exclusively for the performance of official duties.
Not a perquisite.
4. Use of health club, sports and similar facilities provided uniformly to all employees by the employer. Not a perquisite.

Where the employee pays any amount for the above service, the same shall be reduced from the perquisite value determined above.

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Taxable Perquisite Valuation Use of Movable Asset [Rule 3(7)(vii)]

The value of benefit to the employee resulting from the use by the employee or any member of his household of any movable asset (other than assets already specified in the rule and laptops and computers) belonging to the employer or hired by him shall be determined at

If the asset is owned by the employer 10% p.a. of actual cost of asset
If the asset is hired by the employer Hire charges paid or payable

Where the employee pays any amount for the above service, the same shall be reduced from the perquisite value determined above.

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Transfer of any Movable Asset [Rule 3(7)(viii)]

The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his shall be determined as under: -

Cost of such Asset xxx
Less: Cost of Normal Wear and Tear xxx
Cost recovered from the employee xxx
---
xxx
---
Perquisite Value xxx

The cost of normal wear and tear is as under: -

S.No. Description of the Asset Method of Depreciation Rate of Wear & Tear Per Annum
1 Motor-cars Reducing Balance 20%
2 Computers Reducing Balance 50%
3 Other Assets Straight Line 10%

Note: Depreciation to be provided for only in respect of completed years.

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Great things are not done by impulse, but by a series of small things brought together. Vincent van Gogh

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