Financial Daily from THE HINDU group of publications
Thursday, Jun 13, 2002
Financial Daily from THE HINDU group of publications Thursday, Jun 13, 2002 |
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Industry & Economy
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Income Tax Logistics - Railways Full I-T exemption for privilege, free passes of railway staff Our Bureau
NEW DELHI, June 12 THE Government has decided to completely exempt from income-tax the perquisite value of the privilege passes and privilege ticket orders (PTOs) of railway employees. This means that the railway employees including the officers will not have to pay I-T on the perquisite value of their privilege passes and PTOs. The decision of the Finance Ministry was conveyed by the Finance Minister, Mr Yashwant Sinha, to the Railway Minister, Mr Nitish Kumar, when the latter met him to discuss the issue, according to an official release. The Finance Ministry had last month sought the clearance of the Prime Minister's Office (PMO) to partially roll-back its decision to deduct tax at source on the perks given to railway employees in the form of free railway passes and PTOs. The Ministry had proposed exempting one railway pass and two PTOs from tax against the Railway Ministry's demand to withdraw TDS on the value of all free passes and PTOs. While employees in Group A and Group B are entitled to six free passes and 12 PTOs in AC 11 Tier, those in Group C are entitled to three free passes and six PTOs in AC 11 Tier. Employees in Group D can avail of one free pass and two PTOs in Second Class. According to official sources, the proposal to tax the perks of railway employees — free railway passes and PTOs — from April 1, 2002 was based on a directive from the PMO. The PMO, sources said, made it clear that the railway employees could not be treated differently from other employees. Back of the book calculations indicate that the Finance Ministry would stand to lose around Rs 320 crore if no tax were deducted at source on the value of all free passes and PTOs which the railway employees are entitled to. The Railway Ministry, however, contends that the give away works out to around Rs 250 crore. Mr Nitish Kumar had endorsed the stand of 16 lakh railway employees by saying that such concessions were justified to motivate employees.
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