Page 195 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes (b) by a company concern to an employee, being a person who has a substantial interest in the
company concern, i.e., employee is the beneficial owner of at least 20 per cent of the equity
shares of that company or is entitled to at least 20 per cent share is profit of the concern;
(c) an employee whose income chargeable under head salaries (exclusive of the value of all
benefits or amenities not provided by way of monetary payments) excess 50,000, is a
specified employed.

Example: Some of the examples of such perquisite which are included in the salary
income of a specified employee as defined above are:

a. Free boarding facility provided by employer.
b. Free conveyance for private use.
c. Free education facility to the family members of employee.
d. Holiday trips at employer’s cost.
e. Gas, electricity or water supplied free for household consumption.

f. Wages of domestic servants paid by employer.
g. Free lunches or dinners.

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Caution From 1.4.1990 the use of any vehicle provided by a company or an employer for
journey by the assessee from his residence to his office or other place of work, or from
such office or place to his residence, shall not be regarded as a benefit or amenity granted
or provided to him free of cost or at concessional rate for the purpose of computation of
perquisite.

Self Assessment

State whether the following statements are true or false:
17. Medical facility provided to an employee or his family member in any hospitals, clinics,
etc. maintained by the employer are not included in salary of a person for taxation of
perquisites.
18. Free meals provided by the employer during working hours in a remote area or an
offshore installation shall be fully exempt.
19. The value of recreational facilities provided is not exempt.
20. Telephone facility provided at the residence of the employee is exempt to the extent of the
amount of telephone bills paid by the employer when it is used for official and personal
purposes of the employee.

7.6 Valuation of Perquisites

The perquisites which are taxable in the hands of employees are valued in accordance with the
provisions laid down under the Income Tax Rule 3. These benefits can be provided to the
employee or member of his household.

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