Suresh M (Financial Analyst) (124 Points)
30 December 2009An employee getting Employee Purchase Plan option from company in which he is working.
This Purchase plan is applicable only for him and friends and relatives with some % of discounts.
Now - Question is that tax applicable on that discounts? If yes. Legal note please.
Amir
(Learner)
(4016 Points)
Replied 30 December 2009
I believe that by Employee Purchase Plan you mean "Discount Coupons",.
Till there was FBT, the said Discount Coupons were EXEMPT IN THE HANDS OF EMPLOYEES, As Employer HAD TO PAY FBT ON THE SAME.
After the Abolition of FBT, The Perquisite Rules Says that if "Aggregate of GIFTS RECEIVED IN A FINANCIAL YEAR DOES NOT EXCEED RS. 5,000/- THEN NOTHING IS TAXABLE OTHERWISE VALUE OF GIFT COUPONS IN EXCESS of Rs., 5,000 IS TAXABLE AS PERQUISITE"
Suresh M
(Financial Analyst)
(124 Points)
Replied 30 December 2009
I believe, we cannot treat this as gift.
This is discount coupons which is given to employees for their personal use and friends and relative use. Personal use is something which we an accept the taxation. But when coupon given to friends and relatives, technically, the person is not gaining out of any.. But why tax is applicable?
Amir
(Learner)
(4016 Points)
Replied 30 December 2009
My Dear, the perquisites can be provided to either employee or to any member of his family...
Benefit to an Employee's Family Member is like a Benefit to Employee..
I couldn't get you.. Could you please explain..
Suresh M
(Financial Analyst)
(124 Points)
Replied 30 December 2009
Is friends are included in Family definition under Income Tax Act? I hope u got it now.
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 30 December 2009
According to me whether those discount coupons are used by his family or friend doesnt matter here, as these coupons are received by the employee from the employer and should be treated as perquisite.
Do correct me if im wrong.
R!tu Ber!
(Chartered Accountant)
(405 Points)
Replied 30 December 2009
wot is this exactly can u tel me pls as its not clear yet that what it is all have writen according to the extent they understood,, so need clarificatons
Suresh M
(Financial Analyst)
(124 Points)
Replied 31 December 2009
Hi Ritu, The discussion here for TAX on EPP (Employee Purchase Plan). Like MNC's used to provide discount coupons to their employees to buy products with cash discounts. There are coupons are specifically given for Personal and Friends and Relatives. Now, question is that, ex. I am getting coupon for me and my friends as well. I will be accepting taxes for my own purchase on which I am gaining discounts 100%. But why should I get taxed when i give it to friends circle on which I am not gaining any benefit excluding satisfaction that I did something for my friend. I hope u got it.
Amir
(Learner)
(4016 Points)
Replied 31 December 2009
My friend as long as u r one who receives the coupons then IT WILL BE TAXABLE IN UR HANDS NO MATTER U PAASED IT ON TO UR FRIENDS...Look That is what is diiference between APPLICATION OF INCOME AND DIVERSION OF INCOME..
APPLICATION OF INCOME AS IN THIS CASE IS TAXABLE IN THE HANDS OF THE PERSON TRANSFERING IT..WHEREAS THE DIVERSION OF INCOME FROM ITS SOURCE IS TAXABLE IN THE HANDS OF A PERSON RECEIVIVG THE SAME..
I HOPE THIS CLARIFIES YOUR QUERY..IF NOT JUST LET ME KNOW??
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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