Ajay Kumar Maggidi
Quick Summary
We all are suffering from this covid pandemic. This is a tough time for all of us. Many organizations across the globe are offering loans to employees to support them in these difficult times. Here are the income tax implications for employees for the loans or advances offered by the employer. Wh
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FAQ :
Yes, interest-free or concessional loans provided by an employer to an employee are considered a taxable perquisite under Section 17(2) of the Income Tax Act.
The value is determined by calculating the interest at the State Bank of India's lending rate on the maximum outstanding monthly balance, then subtracting any interest the employee has already paid.
Yes, loans are exempt from being a taxable perquisite if they are for medical treatment of specified diseases or if the total aggregate loan amount does not exceed £20,000 in the relevant financial year.
No, if the loan is for medical treatment and the employee is reimbursed under a medical insurance scheme, the exemption does not apply to the reimbursed amount.
The value of perquisites for interest-free or concessional loans is determined as per Rule 3 of the Income Tax Rules, specifically sub-clause (viii) of clause (2) of section 17.
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