Perquistes under salary

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CA SUMIT SAPRA (Querist)
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22 May 2012 the employer gifted in kind to employee rs.25000 and deposited rs 3000 as income tax on employee behalf.now the question is how much will be taxable in the hands of employee whether 25000 or 28000.

K.V.Balasubramanyam

K.V.Balasubramanyam (Expert)
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22 May 2012 Sec 17 (2) (iv) clearly says "any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee" should be considered as taxable perquisite. In my opinion it should be Rs. 28000 to be taxable.

CA SUMIT SAPRA

CA SUMIT SAPRA (Querist)
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22 May 2012 Tax treatment in Hands of employees: Tax on perquisite paid by employer is a obligation of the employee,if it is paid by employer then it should be treated as perquisite and taxable in hands of employee. but Income tax act gives specific exemption to employees in this regard with effect from assessment year 2003-04.. As per Income Tax Act ,1961 section 10(10CC) the tax paid by employer on non monetary perquisites given to employee is not taxable in hands of the employee.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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26 May 2012 In the light of above discussion it can be said that only Rs. 25000/- will be added in
the salary income.
.
Average Rate= (Tax Payable/Total Income)x100
.
In case tax on average rate...i.e.
25000x Average Rate comes to Rs 2500/- only
then Rs. 500/- can be added to salary income of the employee.
.

CA SUMIT SAPRA

CA SUMIT SAPRA (Querist)
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26 May 2012 thanks sir. please correct me if i took wrong your view. Rs.500 (3000-2500) the tax paid by employer.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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26 May 2012 Yes.
.
The Tax paid on perquisites, if exceeds the average rate, amount becomes taxable in the hands of employee.
.
Further in the situation under consideration
, employer can not claim Rs 2500/- as an expenditure, but Rs. 500/ can be claimed as expenditure by the employer.
.

CA SUMIT SAPRA

CA SUMIT SAPRA (Querist)
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26 May 2012 thank u sir. :-)

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