VALUATION OF PERQUISITES tax law notes



Posted on 06-05-2016        By ADMIN



VALUATION OF PERQUISITES

 As a general rule, the taxable value of perquisites in the hands of the employees is its cost to the employer. However, specific rules for valuation of certain perquisites have been laid down in Rule 3 of the I.T. Rules. These are briefly given below. 

2.5.1 Valuation of residential accommodation provided by the employer:-

 (a) Union or State Government Employees- The value of perquisite is the license fee as determined by the Govt. as reduced by the rent actually paid by the employee. 

(b) Non-Govt. Employees- The value of perquisite is an amount equal to 15% of the salary in cities having population more than 25 lakhs, (10% of salary in cities where population as per 2001 census is exceeding 10 lakhs but not exceeding 25 lakhs and 7.5% of salary in areas where population as per 2001 census is 10 lakhs or below). In case the accommodation provided is not owned by the employer, but is taken on lease or rent, then the value of the perquisite would be the actual amount of lease rent paid/payable by the employer or 15% of salary, whichever is lower. In both of above cases, the value of the perquisite would be reduced by the rent, if any, actually paid by the employee.




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