Perquisites – Club Facility
Introduction
Expenses incurred by employers for club memberships or facilities used by employees or their family members are generally taxable as perquisites. Specific exemptions apply for health or sports clubs provided uniformly to all employees.
Tax Treatment of Club Facilities
- Health or Sports Club
- Exempt from tax if facilities are provided uniformly to all employees.
- Club Membership
- Taxable value = Actual cost incurred by the employer, less any amount recovered from the employee.
- Corporate Membership
- Initial membership fees for corporate or institutional memberships are exempt if the benefit does not remain with a particular employee after employment cessation. [Circular No. 15/2001, dated December 12, 2001]
- Club Expenses for Official Purposes
- Taxable value = Nil if the expenses are incurred wholly and exclusively for business purposes.
- Employer must maintain sufficient documentation and certify the expenditure as official.