effects of perks tax

This query is : Resolved

siddharth jain (Querist)
Follow

23 January 2010 hi members

as the gove has imposed the perks tax once again after the scrapping of FBT, i earnestly seek your guidance on a few points:-

1) as we are getting Daily allowance on tours, will it be taxable as it is supposed to be for official purposes like lunch, local travel (though we claim it separately also without the submission of tickets)etc.. (as is the policy with every other company)

2) we also get car mileage of 7000kms a year for commuting against which we dont submit ay bills (but i suppose this is for to and fro residence as all the mileage is used up in coming to office)

Grateful if you can throw some light on these points....

Thanks

siddharth jain

siddharth jain (Querist)
Follow

24 January 2010 somebody plz reply

siddharth jain

siddharth jain (Querist)
Follow

04 February 2010 plz reply........

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

21 July 2024 The imposition of perks tax affects certain benefits and allowances provided to employees, including those related to daily allowances on tours and car mileage for commuting. Here are the considerations for each point:

1. **Daily Allowance on Tours:**
- Generally, daily allowance provided to employees for official purposes during tours is considered a perquisite (perk) under the Income Tax Act.
- The taxability depends on whether the allowance is fully vouched (supported by actual bills or vouchers) or non-vouched (not supported by bills). Fully vouched allowances are usually not taxed, whereas non-vouched allowances are taxable.
- Even if the allowance is non-vouched, if it is specifically for official purposes like lunch and local travel during tours and is reasonable in amount, it may not be fully taxable. However, any excess amount may attract tax.

2. **Car Mileage for Commuting:**
- The mileage allowance provided for commuting (to and from residence and office) is typically considered a taxable perquisite unless it falls under specific exemptions.
- As per Income Tax rules, if an employer provides a car to an employee for official purposes and the employee uses it for commuting, the mileage allowance is taxable.
- If the mileage allowance provided is for official purposes related to the job (like traveling between office locations), it may be exempt from tax. However, if it is primarily for commuting from residence to office, it is taxable.

### Effects of Perks Tax:

- **Tax Liability:** Perks tax (or Fringe Benefit Tax, FBT) is levied on the employer for providing certain fringe benefits or perks to employees. If these benefits are not fully vouched or exempted under specific rules, the employer may have to pay tax on the value of these benefits.

- **Reporting and Compliance:** Employers need to accurately assess and report the value of perks provided to employees in their tax returns. Failure to do so can lead to penalties and legal issues.

- **Employee Awareness:** Employees should be aware of the tax implications of perks provided to them by their employer. Understanding whether an allowance is vouched or non-vouched can help employees plan their tax liabilities accordingly.

### Conclusion:

In your specific case:
- Daily allowances provided on tours should ideally be vouched to avoid taxation. If they are non-vouched and for official purposes like lunch and local travel, they may still be partly exempt depending on the specifics.
- Car mileage provided for commuting is generally taxable unless specifically exempted under certain conditions.

It's advisable to consult with a tax advisor or accountant who can review the specific policies and practices of your company to provide accurate guidance tailored to your situation and ensure compliance with tax laws.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok