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KOLKATA, Feb. 9

SMALL tax-payers have nothing to feel cheerful about the recent circular issued by the Central Board of Direct Taxes (CBDT), according to direct tax experts.

According to the circular, no tax deduction at source would be made under Section 192 of the Income-tax Act for 2001-02 in respect of value of perquisites received in non-monetary form for assesses having income under salaries (exclusive of such perks) not exceeding Rs 1 lakh.

The proposed relief, in their opinion, may not actually bring too many smiles. On the contrary, experts opine that not only tax, but also interest (if delays occur in payment of advance tax) may have to be paid by assesses when they file their returns.

Asked on this, Mr Narayan Jain, tax advocate and author, said it was necessary to first amend Rule 3 of the I-T Rules, which deals with valuation of perks, as explained by the Finance Act 2001. The implied relief, according to him, in the absence of enabling changes in original guidelines, was somewhat illusory.

He pointed out that in the absence of an enabling provision in law, tax would still have to be paid as per the revised valuation rules (notification No. 313/2001-S.O.940(E)), titled Income-tax (22nd Amendment) Rules, 2001, announced on September 25, 2001.

He said the Finance Act 2001 amended Section 17(2), by which the Government was authorised to make rules for valuation of perquisites and fringe benefits given to employees. The said notice was issued in terms of this, and on December 12, 2001, detailed guidelines for TDS from salaries were announced.

Mr Jain clarified that while the CBDT circular of February 4, 2002 modified the one issued on December 12, still it does not unambiguously state that tax need not be paid at all. There is an absolute need to amend the enabling Rule 3, and till then, even perks, despite the recent circular, will be considered as income in the hands of the assessee, and accordingly taxed. The sooner a clarification is issued, the better it would be for all of us, he pointed out.

Attempts to clarify the circular at the CBDT level did not yield results, as Members, busy in the Budget making exercise (which has already started), declined to take calls.

As per the proposed relief for the salaried under section 192, it would also apply to perks received in the form of free or concessional tickets received by employees of airlines or railways.

As per the Rules issued on September 25, 2001, "the value of any benefit or amenity resulting from the provision by any undertaking engaged in the carriage of passengers or goods to any employee or to any member of the household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by the undertaking for the purpose of transport of passengers or goods, shall be taken to be the value at which such benefit or amenity is offered by the undertaking to the public, as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity."

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