Free or Concessional Loan to Employees Introduction Interest-free or concessional loans provided by employers to employees or their family members are taxable as perquisites under “Salaries.” However, petty loans up to Rs. 20,000 and loans for specified medical treatments are exempt. Taxability of Loans Situations Where Perquisite Arises Loans for personal purposes like education, marriage,… Read More »

Taxability of Insurance Taken by Employer for Employees Introduction Insurance policies taken out by employers for their employees may be taxable as perquisites. Tax treatment depends on the type of policy, its beneficiary, and the circumstances of payout. Key Types and Tax Implications Keyman Insurance Policy A life insurance policy taken out by the employer… Read More »

Leave Travel Allowance (LTA) Introduction LTA is provided by employers to employees for travel within India. Exemption is allowed under Section 10(5) for journeys made by the employee and his family, subject to conditions. Key Provisions Eligibility for Exemption Tax exemption is allowed for actual travel expenses incurred by the employee or family. Unspent allowance is taxable.… Read More »

Taxability of Amenities Provided to Specified Employees Introduction Certain benefits or amenities provided to specified employees are taxable as perquisites under “Salaries.” These include supply of gas, electricity, domestic servants, and other services. Definition of Specified Employees Directors of a Company: Includes full-time, part-time, and nominee directors. Employees with Substantial Interest: Beneficial owners of ≥20%… Read More »

Valuation of Educational Facilities Introduction The educational facilities provided by employers for specified employees’ children are taxable as perquisites under “Salaries.” However, certain exemptions and valuation rules apply based on the type of benefit. Key Provisions Free Education Facility in Employer-Owned Institutions Exempt up to 1,000/month per child. Only the amount exceeding 1,000 is generally… Read More »

Perquisite – Use of Motor Car Introduction When an employer provides a car or reimburses expenses for personal or official use, the value of this benefit is taxable as a perquisite under “Salaries.” Taxability depends on ownership, maintenance costs, and usage. Perquisite Valuation Based on Ownership and Usage Employee-Owned Vehicle with Reimbursement Official Use Only:… Read More »

Rent-free Accommodation Introduction When an employer provides residential accommodation rent-free or at a concessional rate, the value of such a benefit is taxable as a perquisite under “Salaries.” This applies regardless of whether the accommodation is employer-owned or leased. Key Provisions Definition Accommodation includes houses, flats, hotels, guest houses, caravans, mobile home, ship or other… Read More »

Perquisites Introduction Perquisites refer to benefits or facilities provided by an employer to an employee in addition to salary. These benefits are taxable under the head “Salaries” when provided during employment. Definition and Examples Perquisites are emoluments for the personal benefit or use of the employee, in cash or kind, or money’s worth. Example: A… Read More »

Deductions from Salary The Income-tax Act allows three deductions under Section 16 for salary income: Standard Deduction Deduction for Entertainment Allowance Deduction for Professional Tax Standard Deduction [Section 16(ia)] Available to all employees, including retirees receiving pension. Deduction amount: 50,000 (for the regular tax regime). 75,000 (for the new tax regime under Section 115BAC. No documentation required to… Read More »