Taxability of Perquisites

If the house is taken on rent by your employer, then cost is calculated as: Lease rent paid or payable by the employer or 15 percent of the salary, whichever is lower.

Interest that would have normally been payable on interest free or concessional loans of up to Rs 20,000 or loans made for medical treatment of specified diseases such as cancer, TB etc., are not chargeable to tax as a perquisite.

Expenses in relation to telephone or mobile phones, providing laptop for work purposes are not treated as a perquisite, if used for official purposes.

Any gift or voucher received by an employee on ceremonial occasions or otherwise is regarded as a perquisite. These gifts are taxable fully if received in cash or exempt up to Rs 5,000 if received in kind such as gift cardsl. Therefore, if you have received a gift card of Rs 20,000 from your employer, then only Rs 5,000 will be exempt from tax. The balance of Rs 15,000 will be added to your salary and taxed accordingly.

Similarly, the cost of employees’ stock options (ESOPs) or sweat equity shares issued will be calculated as: Fair market value of shares or securities on date of exercising option by the employee minus amount paid by employee.

Deduction on entertainment allowance received by government employees only which is lower of:

i) Actual amount received

ii) One-fifth of the salary excluding any allowance, benefit or other perquisi

iii) Rs 5,000

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