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% voting power in the company.
- Any other employees is deemed to be a specified employee if his monetary income under the head salary exceed Rs. 4,00,000.
Taxable Benefits for Specified Employees
- Gas, Electricity, or Water Supply
- Employer-Owned Resources: Taxable value is the manufacturing cost per unit, less recovery from the employee.
- Third-Party Supply: Taxable value is the actual amount paid by the employer, less recovery from the employee.
- Free or Concessional Education
- Employer-Owned Institutions: Exempt up to 1,000/month per child; taxable for specified employees beyond this limit.
- Reimbursement of Education Costs: Taxable as a monetary perquisite for all employees.
- Domestic Servants
- Taxable value: Total cost incurred by the employer for services of sweepers, gardeners, or attendants, less recovery from the employee.
- Transportation Facility
- For employees of transport undertakings, the taxable value is the fare offered to the public, reduced by recovery from the employee.
- Exempt for airline and railway employees.
- Employer-Provided Cars
- Taxable value depends on car type (small/big) and usage (personal/official), calculated per Rule 3.
- If sold to an employee at a concessional price, the taxable value is the cost to the employer minus 20% depreciation per year of use.