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Section 10 (10CC) and section 192(1A)

KAVITA GUPTA (abc) (24 Points)

27 February 2009

hello frnds,

i culdnt understand the tax on perquisite paid by employer u/s 10(10CC)& same dealt in TDS u/s 192 (1A).

kindly help me to understand the concept of it.

iam referring singhania book .

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4 Replies

Madhavendra (CA Final Student) (99 Points)
Replied 27 February 2009

Tax actually paid by the employer on a perquisit provided to the employee ie. Say on Non-monetary items shall be exempt in the hands of employees (Section 10(10CC)). lets take an example from Dr.Girish Ahuja: page No.1036 Total salary income (including Non monetary perquisit of rs.1 lakh) is Rs. 4.2 lakh.The employer opts to pay tax on Non monetary perquisit. Lets solve your query: Income Chargeble under Salary : 4,20,000 Tax on above : 40,170 Average Rate of Tax (40170/420000*100) = 9.564% Tax payable on Non monetary perquisits = 1,00,000*9.564% = Rs.9564 Tax to be deduted every month = 9564/12 = 797. Under sec 10(10CC) Rs.9564 is the tax amount which an employee needs to pay but when since the employer opts to pay it, the same will not be taxed in the hands of the employeea and shall be exempt.employer will not get dedution for the above tax paid.thank you.

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Kishan Singh (Service) (37 Points)
Replied 05 March 2009

Mr Madhavendra, can you clarify if employer pay tax on non-monetary benefit i.e. Rs.9564 as given in your example then how much amount by way of TDS will be receovered from employee salary whether it is Rs.30,606 (i.e Rs.40170-Rs.9564) or tax liability will be recalculated on Rs.3,20,000/- (i.e Rs.4,20,000-Rs.1,00,000). Thanks in anticipation.

Madhavendra (CA Final Student) (99 Points)
Replied 05 March 2009

The employee's total income is 420000 including non-monetary perquisits.Remember , non monetary perquisits are taxable and hence the total tax comes to 40170.Now tax will be calculated on this amount and credit for non monetary perquisits will be given.Hence only 30606 will be taxed in employees hand.So each month tax to be deducted from the employee = 30606/12 = Rs.2550.5. Tax deposited by employer each month = 9564/12= Rs.797.Hence total tax to be deposited whole year = Rs. (2550.5+797)*12 = Rs. 40170 which is the total tax payable on 420000. :-)

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