Perquisites (monetary & non-monetary)

Ashish (Audit Assistant) (335 Points)

26 August 2011  

I have the following queries on perquisites:

1. Type of perk: Does the income tax act define what is monetary perquisite & what is non-monetary perquisite. If so, what is the section no.

2. SAF Contribution: Employer's contribution to approved SAF fund in excess of Rs.1lac is a taxable perquisite. However, this is a monetary or non-monetary perquisite. I am asking this because in one case the tax on SAF contribution is also being paid by classifying it as monetary / non-monetary becomes vital.

3. Treatment of tax paid on monetary & non monetary perk: Is the below treatment mentioned correct:


Non- monetary perquisite:

 1.     Non-monetary perquisite – Taxable in hands of employee (Sec 2(24)(iii))

2.    Tax on Non-monetary perquisite paid by employer –

a.     Exempt u/s 10(10CC)

b.    Tax paid by employer on perquisites should be paid in accordance with average tax due to employee (Sec 192(1A) & (1B)).

3.     Tax payment and Form 16: Such tax paid by employer is to be shown in tax deducted at source in Form 16 (TDS certificate). Sec 192(1B)

4.     Treatment in ETDS return: In e-TDS return tax treatment is: First employee income will be shown inclusive of such perquisites and in TDS column, total of the tax deducted from salary by employer and tax paid by employer on behalf of employee will be shown. (Sec 2(24)(iii) & Sec 192(1B))


Monetary Perquisite:

1.     Monetary perquisite – Taxable in hands of employee (Sec 2(24)(iii))

2.     Tax on monetary perquisite paid by employer –

a.     Tax paid by employer on monetary perquisite is to be included in total income of employee.

b.    Tax liability calculated on slab rates on his total income will be reduced by the tax already paid to get tax payable by employee.


Thanks in advance....awaiting replies.