Financial Daily from THE HINDU group of publications
Thursday, Apr 11, 2002
Industry & Economy - Income Tax
Government - Policy
I-T rules on perks to be eased further
NEW DELHI, April 10
THE Finance Ministry is set to further relax the existing taxation rules on valuation of perquisites including the requirements on documentation.
Last year, the I-T rules were rationalised for valuation of perquisites on the basis of their "cost to the employer" except for houses and cars where a different criterion was adopted.
The first round of relaxation in the perquisite rules for certain categories of salaried employees was done a few weeks before the 2002-03 Budget presentation.
As per the revised rules, no perquisites will be assessed for the assessment year 2002-03 for employees whose taxable income, excluding perquisites, is up to Rs 1 lakh per annum. Relief has also been provided to railway and airline employees whereby no tax is to be deducted at source on the value of free or concessional tickets received by them.
In the Budget, the Finance Minister, Mr Yashwant Sinha, has proposed giving an option to the employer to pay the tax on perquisites on behalf of employee.
A slew of representations seeking easing of the requirements on documentation and more reliefs had prompted the Revenue Department to consider a further relaxation of the rules, said officials.
The criteria for cars and houses were also set to be reviewed. As per the existing rules, the value of rent-free unfurnished accommodation for private sector employees is charged at 10 per cent of the asseesse's salary.
In the case of cars, the value of a motor car provided by the employer for personal or private use by the assessee is determined as the sum actually expended by the employer on maintenance and running of the car in the relevant previous year, including any remuneration paid by the employer to the chauffeur.
If difficulties are encountered in such calculations, the value of perquisite per month is Rs 1,200 for cars - with a HP rating not exceeding 16 or with an engine size not exceeding 1.88 litres - hired by the employer and all expenses on maintenance and running are reimbursed to the assessee by the employer. The value is higher at Rs 1,600 for cars exceeding these capacity norms.
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