Page 194 - DCOM301_INCOME_TAX_LAWS_I

Unit 7: Income under the Head Salaries

2. Value of any concession in the matter of rent in respect of residential accommodation Notes
provided to the assessee.
3. Sum paid by the employer (directly or indirectly) for affecting an assurance on the life of
the employee or for providing an annuity. If the amount is paid to a recognised provident
fund or an approved superannuation fund, or to a deposit linked insurance fund established
under the Coal Mines Provident Fund Act or Employees’ Provident Fund Act, the sum so
paid is not to be included in the salary income.

4. Sum paid by the employer in respect of any obligation of the assessee, which would
otherwise have been payable by the assessee. Some of the examples of such expenses are
as follows:
a) Income-tax paid by the employer due from the employee.
b) Payment of club bills, club subscription or hotel bills of the employee.
c) Fees paid by the employer directly to the school or reimbursement of tuition fees of
the children of the employee.
d) Payment of any loan due to the employee.
5. The value of any specified security or sweat equity shares allotted or transferred, directly
or indirectly, by the employer, or former employer, free of cost or at concessional rate to
the assessee.

6. The amount of any contribution to an approved superannuation fund by the employer in
respect of the assessee, to the extent it exceeds one lakh rupees.
7. The value of any other fringe benefit or amenity as may be prescribed.

Example: Some other examples of taxable perquisites are as follows:
(a) Any reward awarded. For instance, a professional jockey receives present from his
employer on winning the race.
(b) Any legal charges incurred by the employer to save or defend the employee. For
instance, if an employee knocks down a pedestrian during the course of employment
or otherwise while driving the company’s car due to his negligence and, to defend
his case in the court, the employer incurs heavy expenses, the amount spent by him
on this account would represent a perquisite. It is likely that the actual expenditure
incurred by the employer might be much larger than what the employee himself
would have done if he were to take up the proceedings himself. Even in such cases,
the perquisite chargeable to tax would be the entire amount spent by the employer
and not only a portion thereof which the employee would have spent if he had
himself taken up the legal proceedings in the court. Thus, the cost of legal defence of
a criminal charge or civil litigation expenses incurred by the employer on behalf of
the employee even in his own interest for the purpose of retaining the services of
the employee would be taxable as perquisite.

7.5.3 Perquisites Taxable only in the Cases of Specified Employees

The value of certain benefit or amenity granted or provided free of cost or at a concessional rate
in any of the following cases only shall be included in the salary income:
(a) by a company to an employee who is director thereof

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