Seminar on

Salary - Taxation

CA CHANDRASHEKHAR V. CHITALE
Chairman, Direct Taxation
Committee, MCCIA

CA Chandrashekhar V. Chitale
Salary - Taxation

PERQUISITES
Taxation and Exemption

CA Chandrashekhar V. Chitale
TAX FREE PERQUISITES
Use of computer and laptop to
employee or member of his household.
Medical Facility to employee or his
household member in specified
hospitals and in respect of specified
diseases.
Telephone Facility at residence.
Cell Phone
CA Chandrashekhar V. Chitale
Medical Facility

Medical Allowance FULLY Taxable

Reimbursement of Medical Expenses

Exempt subject to conditions

CA Chandrashekhar V. Chitale
Medical Reimbursement
(i) Medical treatment provided to
an employee or family member in
hospital maintained by the employer;
(ii) Reimbursement of medical
expenditure on prescribed deceases by
employee for him / his family member :
in hospital maintained by Government /
local authority / approved hospital for
medical treatment employees
CA Chandrashekhar V. Chitale
Medical Reimbursement
(iii) Medi-claim premium of Govt.
Approved scheme for employee
(iv) Medi-claim premium of Govt.
Approved scheme for employee /
family member
(v) Reimbursement of Medical Expenses
actually incurred MAX Rs. 15,000
(vi) Expenditure on medical treatment
outside India
CA Chandrashekhar V. Chitale
TAXABLE PERQUISITES

1. Rent Free Accommodation

2. Concessional Accommodation
3. Motor car facility
4. Free Domestic Servants
5. Gas, Electric Energy, Water
Supply

CA Chandrashekhar V. Chitale
TAXABLE PERQUISITES

6. Education Facility to any

household member
7. Interest Free / Concessional
Loan
7. Any sum paid by the employer on
behalf of employee
8. ESOP

CA Chandrashekhar V. Chitale
1
RENT FREE UNFURNISHED ACCOMMODATION

CIRCUMSTANCES VALUATION
Central Government or License fee determined y the
State Government. Central or State Government

Non-Government
employer population as per 2001 census
(a) Accommodation
(i) exceeding 25 lakhs - 15%
owned by the employer.
(ii) exceeding 10 lakhs but less
than 25 lakhs - 10%

(iii) in other areas - 7.5%

(of
CA Chandrashekhar V. ChitaleSALARY)
1
RENT FREE UNFURNISHED ACCOMMODATION

S.N CIRCUMSTANCES VALUATION

(b) Accommodation Actual lease rent

taken or rent or lease or 15% of salary
by the employer whichever is lower.

CA Chandrashekhar V. Chitale
1
RENT FREE FURNISHED ACCOMMODATION

CIRCUMSTANCES VALUATION
Accommodation provided License fee determined by
by Central Government or the Central or State
State Government. Government

Accommodation provided Value for unfurnished

by any other employer accommodation +10% p.a
and- for cost of furniture or hire
(a) Accommodation charges in case hired
owned by the employer.

CA Chandrashekhar V. Chitale
1
RENT FREE FURNISHED ACCOMMODATION

CIRCUMSTANCES VALUATION
(b) Accommodation taken Value for unfurnished
or rent or lease by the accommodation +10%
employer p.a for cost of furniture or
hire charges in case hired
Accommodation provided 24% of salary or the
in a hotel (except in case actual charges paid to
of transfer) such hotel whichever is
lower.

CA Chandrashekhar V. Chitale
1
ACCOMMODATION PERK
SALARY means:
Basic + Dearness Allowance + All
Allowances

Rent paid by the employee is

deducted from perquisite value.

CA Chandrashekhar V. Chitale
2
MOTOR CAR FACILITY

CIRCUMSTANCES VALUATION
Motor car owned or hired
by employer and-

(a) Used for official Nil

purpose.

(b) Used for personal Actual expenditure plus

purposes remuneration of the chauffeur

CA Chandrashekhar V. Chitale
2
MOTOR CAR FACILITY
CIRCUMSTANCES
(c) Partly official purpose +
partly personal Use
(i) expenses met or
reimbursed by employer;
(ii) expenses for personal
use met fully by employee
CA Chandrashekhar V. Chitale
VALUATION
Rs. 1800 + Rs. 900(if
chauffeur is provided)
Plus Rs. 600 (if cubic
capacity exceeds 1.6 liters)
Rs. 600 + Rs. 900(if chauffeur
is provided)
Plus Rs. 300 (if cubic
capacity exceeds 1.6 liters)
2
MOTOR CAR FACILITY

CIRCUMSTANCES VALUATION
Any other automotive
conveyance owned by the
employee, but expenses met
or reimbursed by the
employer and
(i) Used exclusively for
official purpose. No value
(ii) Used partly for official
purpose and partly for Actual amount of
personal purpose. expenditure less Rs. 900/-
CA Chandrashekhar V. Chitale
2
MOTOR CAR FACILITY

CIRCUMSTANCES VALUATION
Motor car owned by the
employee and expenses met
or reimbursed by employer -
(i) Used exclusively for No value
official purpose.
(ii) Used partly for official
purpose and partly for Amount of expenditure
personal purpose. incurred amount
specified in S.N (1) (c) (i)

CA Chandrashekhar V. Chitale
3
FREE DOMESTIC SERVANTS

Domestic Servants-
sweeper, gardener, watchman, or a personal
attendant .

Valuation : Actual cost

Less amount paid by the employee.

CA Chandrashekhar V. Chitale
4
GAS, ELECTRICITY OR WATER SUPPLY

S.N CIRCUMSTANCES VALUATION

1 From owned resources The manufacturing cost per
of the employer unit incurred

2 Purchased by outside Amount actually paid to

agency such agency

In both the cases amount paid by the employee shall be

deducted from the value so arrived.

CA Chandrashekhar V. Chitale
5
FREE OR CONCESSIONAL EDUCATION FACILITY

S.N CIRCUMSTANCES VALUATION

1 Institution owned by the Amount of expenditure
employer incurred by the employer.

2 Any other Institution Cost of education in similar

institution in or near the
locality

Exception : Education institution maintained and

owned by Employer free education to children
of employee if Cost < Rs. 1,000
CA Chandrashekhar V. Chitale
6
INTEREST FREE / CONCESSIONAL LOAN

VALUATION:
Interest charged by the State Bank of India on the
maximum outstanding balance
less interest actually paid employee to the company.

EXEMPTION:
Loan does not exceed Rs. 20,000/-.
Loan for medical treatment of diseases specified in
rule 3A

CA Chandrashekhar V. Chitale
7
FREE FOOD AND BEVERAGES
VALUATION : Expenditure incurred by employer
Amount recovered from employee is deducted

EXEMPTION:
# during the working hours in office
premises not exceeding Rs. 50/- per meal.
# through specified Coupons PLUS
Free tea and snacks during working hrs.
Free non-alcoholic and snacks during working hrs.
at remote area / offshore location
CA Chandrashekhar V. Chitale
8
Gift
Any gift, voucher, token
Fully taxable

CA Chandrashekhar V. Chitale
9 Club Membership

Taxable
Value = Amount paid less recovery from
employee
Exempt only if:
(i) used for official purposes
(ii) Employer keeps full details and
(iii) Employer certifies official use
CA Chandrashekhar V. Chitale
10
Club Payments / Credit Card

Taxable
Value = Amount paid less recovery from
employee
Exempt only if:
(i) used for official purposes
(ii) Employer keeps full details and
(iii) Employer certifies official use
CA Chandrashekhar V. Chitale
10

Club Expenses
Exempt for :
Use of Health Club, Sports Club or
Similar Facilities
By Employee
Provided to all uniformly

CA Chandrashekhar V. Chitale
11

Use of Movable Assets

Valuation : 10% of Actual Cost or Rent
paid less recovery from employee
Use of Computers and Laptop :
Perquisite value = NIL

CA Chandrashekhar V. Chitale
Movable Asset Transfer
Excess of Depreciated Value of Asset
over price paid by employee
Depreciation Rate and Method:
(i) Car 20% on WDV basis
(ii) Computers, Electronic Items
50% on WDV basis
(iii) All Others 10% on SLM basis

CA Chandrashekhar V. Chitale
Any Other Perquisite
Valuation =
Cost to Employer on ALP basis

Less
Recovery from Employee

CA Chandrashekhar V. Chitale
 Employees Stock Option Plan
Option given to employees to apply for
the securities/shares
Specified security or sweat equity
shares allotted
By a company to its employees
Free of cost or at a discount or
concessional price

CA Chandrashekhar V. Chitale
 Employees Stock Option Plan
Perquisite =
On the date of Exercise of Option

VALUATION:
Fair Market Value of Stocks
Less
Amount paid by employee

CA Chandrashekhar V. Chitale
 Employees Stock Option Plan

Valuation:
(i) Quoted Average of Opening and
Closing Price
(ii) Unquoted As determined by the
Merchant Banker

CA Chandrashekhar V. Chitale
Employees Stock Option Plan
Sale of Securities by Employee
Capital Gain =
Consideration Received
Less
Perquisite Value of Shares Sold +
Payment made to Employer

CA Chandrashekhar V. Chitale
 Thank You

Any Questions?

CA Chandrashekhar V. Chitale