Tax on EPP (Employee Purchase Plan)

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"

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?

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..

Is friends are included in Family definition under Income Tax Act?  I hope u got it now.

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.

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

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.

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??