Income tax on laptop and mobile devices got from my previous

Tax queries 2231 views 7 replies

Manjunath

Nill

34 Points Joined September 2012

Dear Sir/Madam,

I was working in PSU(Govt.) and I had got officially Laptop (Purchased in Nov 2015) and Mobile(Aug 2015), amount was reimbursed by company fully i.e total of ~Rs.99000/-(both Laptop and mobile),
as per company policy (lifetime of for laptop is 3 year and mobile 2 years as per company policy )

I quit the Company in July 2016. I had to purchase the device as per policy at depreciation rate which was Rs.7000/- which I paid the company and kept the device.

Now in my income tax sheet FY 2016-17 provided by the company they have shown Other fringe benefits of Rs.92000/- (Rs.99000-70000) as taxable income.

I asked for clarification from the company regarding the same they didn't respond properly.

Presently I'm in 20% Income tax slab, please clarify do I need to pay income tax on Rs.920000/- i.e Rs18000/- as income tax.

My Query

actually, I didn't complete One year in terms of no. of days(<365 days), after purchasing device.

1. My question, is it my responsibility to pay tax on a device provided by the company which I used while in the company, and had to buy back compulsorily?

2. How is Depreciation calculated in terms of no. of days after purchasing or financial year to calculate one Year? I mean If buy in FY 2015-16 and Quit in FY 2016-17 is it considered one year for depreciation?

3. Do I need to pay tax as per my slab rate or is there a fixed rate for above case?

thanks

Replies (7)

Adityaraj Singh Gurjar

20 Points Joined April 2017

I'm CA Student and According to me the taxable amount in this case(I might be wrong) will be-
Cost of Mobile and laptop = Rs. 99,000
Depreciation would be deducted @ 50% on WDV basis (For 1 year in your case i.e from Aug 2015 to July 2016)
Thus,
Cost after dep would be Rs. 49,500,
Further you have paid the company Rs. 7000 for such purchase therefore it is deductible from the Taxable amount i.e Rs. 49500,
So Rs. 49,500-7000= Rs. 42,500 (Taxable Amount).
In the above it is assumed that both laptop and mobile are given to you on same day. If you can Bifurcate the amounts of laptop and mobile respectively the solution will be more accurate.

Adityaraj Singh Gurjar

20 Points Joined April 2017

Your Taxable amount shall be the Cost of asset(s) less Depreciation and less consideration(If any) for asset(s) purchased thereof.
Calculation of Depreciation:
50% of Cost of asset given by the company x No. of months or Days used/Total days or Months in a year.
Yes you have to pay tax on such taxable amount post dep and consideration deduction but not necessarily 20% of such amount, Taxable amount will be added to your Salary and will be taxed accordingly on the basis of slab rates.

Manjunath

Nill

34 Points Joined September 2012

One more thing, calrification about calculation

assuming 6 months 50%X6/12 =25% effective depreciation is it right?

I didnt find any where on internet depreciation calculation for less than a year, do I need to cross check with some other reference or what u have suggested is fine?

Thanks in advance

Adityaraj Singh Gurjar

20 Points Joined April 2017

yes for example:
WDV of asset: Rs. 100,000 As on 1 April 2017
Sold On: 30th September 2017
Rate Of Depreciation: 25% p.a on WDV Basis
Therefore,
Depreciation would be 100,000 x 25% = Rs. 25,000 for one year,
For 6 months (i.e from 1 april to 30 sept) it would be 25,000 x 6/12 = Rs. 12,500.
Therefore the WDV as on the date of sale i.e 30th SEPT 2017 would be Rs. 100,000 - 12,500 = Rs. 87,500.
It should be noted that as per the provisions of the Income Tax Act, 1961 Dep is allowed on WDV basis in case of-
1) Laptop, Computer and other electronics (50%)
2) Motor Car (40%)
Note: The above assets must be given by an employer (Sold) to the employee for free or for a consideration as the case may be.

Adityaraj Singh Gurjar

20 Points Joined April 2017

You may refer to "Depreciation Accounting" for more knowledge and better understanding of Methods of calculating depreciation.

P.S- Please do cross check with a Professional since I'm only a Student.

Sivaiah Ganga

68 Points Joined April 2017

by any employer [including a company] to an employee to whom the provisions of paragraphs [a] and [b] of this sub-clause do not apply and whose income under the head "Salaries" [whether due from, or paid or allowed by, one or more employers], exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds fifty thousand rupees:

Explanation.—For the removal of doubts, it is hereby declared that the use of any vehicle provided by a company or an employer for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate for the purposes of this sub-clause;

[iiia] [***]

[iv] any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee;

Sivaiah Ganga

68 Points Joined April 2017

Please see the above sec 17... Wherein it was stated that any sum paid by the employer in respect of which, the employee has to bear the cost had the company had not made the payment..... The question of company claiming depreciation doesn't arise..... In case of salaried employees depreciation is not applicable... The employer rightly treated 92,000 as perquisite.... The employee has to pay tax...... There is no other way to escape......