Perquisites vis a vis tax planning

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parag (Querist)

26 December 2009 Here the issue is :
when in the case of a director using the accomodation provided by the company as perquisites which is ultimately of his family member then how can he be the tax saver being adding of Perx came to 15%.

E.g.
A,B,C,D are Directors having Family members X,Y,Z.
now if Salary of A is 25 Lacs P.a.
and Company takes house on rent from X for A at 6 Lacs p.a.
The perquisites to be added in A's income will be 15% of his Salary. i.e. 3.75 Lacs also X wil get the Net HP income as 4.2 Lacs (6 Lacs-30% Std Ded in HP Head).

But company can save only 6 Lacs being expenditure for Directors home.

The Ultimate effect are :

Company's income decreases = 6.00 Lacs
Director,s income increases = 3.75 Lacs
X's income increases = 4.20 Lacs
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Ultimately increase
in income of the Group = 1.95 Lacs
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So now how can legally it may be turned in to some profitability operation being all this wil take place in next months...
Is there any way one can suggest to come out of this loss of 1.95 Lacs of the Group...

Kindly think twise before replying this question.... Thanks

CA Mani

CA Mani (Expert)

28 December 2009 If any transaction is carrying out and due to that,some taxable income increases of one person and some expenditure is allowable to another person that does not means it will be in same proportion
Three taxable person is involved in any transaction it is obvious Govt will get some tax due to it
Anyway wait for some experts for more reply

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