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Taxability for Specified Employees

U.C Date : 25 Feb 2015

 Specified Employees

The following person shall be considered as specified employees: –

  1. An employee who is a director of company.
  2. An employee being a person who has substantial interest in the company i.e. who is the beneficial owner of equity shares carrying 20% or more of the voting rights in the company
  3. Any other employee whose income chargeable under the head “Salaries” exceeds Rs 50,000.

While calculating limit of Rs 50,000 following amount shall be excluded: –

  • All non monetary benefits
  • All monetary payments exempt under Section 10
  • Deduction under section 16

Followings perquisites will be taxable in the hands of Specified Employee: –

  • Gas, electricity or water

If purchased by the employer from an outside agency

Taxable Value = Actual amount paid or payable by employer to outside agency – Amount recovered from employee.

If provided by the employer from his own source                                                                                             Taxable Value = Manufacturing cost to the employer – Amount recovered from employee.

  • Free domestic servant (sweeper, gardener, watchman or personal attendant)

Taxable Value = Salary paid or payable to such person – Amount recovered from employee.

  • Free or concessional education

If expenditure incurred by the employer

Taxable Value = Actual amount spend by the employer – Amount recovered from employee.

If provided in a education institution owned and maintained by the employer              Taxable Value = Cost of such education in a similar institution in/near the locality – Rs 1,000 per month per child –  Amount recovered from employee.

Note: –

  • If the education facility is provided to a member of household then deduction of Rs 1,000 per month per child is not available. It is only available if the education facility is provided to employee’s children.
  • If the scholarship is given by the employer to children of its employee solely at its discretion without reference to terms of employment is not chargeable as perquisite in the hand of employee.
  • Free transport provided by a transport undertaking to its employee

Taxable Value = Amount chargeable from general public for similar facility – Amount recovered from employee.

  • Motor Car facility
 WHEN CAR IS OWNED BY EMPLOYEE AND MAINTENEACE AND RUNNING EXPENSES ARE MET OR REIMBERSED BY EMPLOYER
If car is used wholly for official purpose Nil if specified conditions are fulfilled.
If car is used wholly for private purpose Actual expenditure incurred by the employer – Amount recovered from employee
If car is partly used for official purpose and partly used for private purpose Actual expenditure incurred by the employer – Specified Amount  or Amount claimed when specified conditions are fulfilled – Amount recovered from employee
WHEN CAR IS OWNED OR HIRED BY EMPLOYER AND MAINTANCE AND RUNNING EXPENSES ARE MET OR REIMBERSED BY EMPLOYER
If car is used wholly for official purpose Nil if specified conditions are fulfilled.
If car is used wholly for private purpose Actual expenditure incurred by the employer (Including hire charges and remuneration to chauffer)+ 10% p.a. of the actual cost of the car to the employer (if car is owned by employer) – Amount recovered from employee
If car is partly used for official purpose and partly used for private purpose Specified Amount
WHEN CAR IS OWNED OR HIRED BY EMPLOYER AND MAINTANCE AND RUNNING EXPENSES ARE MET BY EMPLOYEE HIMSELF
If car is used wholly for official purpose Nil
If car is used wholly for private purpose Actual expenditure incurred by the employer (Including hire charges and remuneration to chauffer)+ 10% p.a. of the actual cost of the car to the employer (if car is owned by employer) – Amount recovered from employee
If car is partly used for official purpose and partly used for private purpose If cubic capacity does not exceed 1.6 litresRs 600 p.m. + Rs 900 p.m. (If chauffer is provided)If cubic capacity exceed 1.6 litresRs 900 p.m. + Rs 900 p.m. (If chauffer is provided)

Nothing is deductible in respect of any amount recovered from employee

 

Specified Amount

If cubic capacity does not exceed 1.6 litres

Rs 1800 p.m. + Rs 900 p.m. (If chauffer is provided)

If cubic capacity exceed 1.6 litres

Rs 2400 p.m. + Rs 900 p.m. (If chauffer is provided)

Specified Conditions

  • The employer has maintained complete details of journey undertaken for official purpose which may include the date of journey, destination, mileage and the amount of expenditure incurred thereon.
  • The employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of the official duties.

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