Valuation of Other Perk 1

Valuation of Other Perquisites

Valuation of Other Perquisites

Valuation of perquisites in respect of Motor Car [Rule 3(2)]

Motor-car facility provided by an employer is taxable in the hands of employee on the following basis:

Car is owned by	Car is Maintained by	Used by employee for	Taxable value	Who is Chargeable
Employer		Office purpose	Not a perquisite	Not applicable
		Personal purpose	Maintenance Cost + Depreciation	Specified Employee
		Both purpose	Rs.1800 or Rs.2400 p.m. (See 2)	Specified Employee
Employer	Employee	Office purpose	Not a perquisite	Not applicable
		Personal purpose	Depreciation	Specified employee
		Both purpose	Rs.600 / Rs.900 p.m. (See 3)	Specified employee
Employee	Employer	Office purpose	Not a perquisite	Not applicable
		Personal purpose	Maintenance Cost	All employee
		Both purpose	Actual expenditure incurred by the employer as reduced by Rs.1800 / 2400 p.m. (further deduction of Rs.900 p.m. for driver) or a higher deduction if prescribed conditions are satisfied	All employee
Employee		Any purpose	Not a perquisite	Not applicable

1. D = Depreciation @ 10% of actual cost of the car. However, if the car is not owned by employer then actual hire charge incurred by employer shall be considered.

2. Rs.2400 p.m. in case of higher capacity car (i.e., a car whose cubic capacity of engine exceeds 1.6 litres) and Rs.1800 p.m. for lower capacity car.

3. Rs.900 p.m. in case of higher capacity car (i.e., a car whose cubic capacity of engine exceeds 1.6 litres) and Rs.600 p.m. for lower capacity car.

4. Conditions to be fulfilled for claiming higher deductions :

The employer has maintained complete details of journey undertaken for official purpose, which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon; and
The employer gives the certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

Chauffeur / Driver
If chauffeur is also provided, then salary of chauffeur is further to be added to the value of perquisite (as computed above). However, if car is used for both i.e. official and personal purpose then Rs.900 p.m. (irrespective of higher or lower capacity of car) is to be taken as value of chauffeur perquisite.

Notes

If motor car is provided at a concessional rate then charges paid by employee for such car, shall be reduced from the value of perquisite.
When more than one car is provided to the employee, otherwise than wholly and exclusively for office purpose, the value of perquisite for -
1. One car shall be taken as car is provided partly for office and partly for private purpose i.e. Rs.1800 or Rs.2400 p.m. (plus Rs.600 p.m. for chauffeur, if provided); and
2. For other car(s), value shall be calculated as car(s) are provided exclusively for private purpose.

Use of any vehicle provided to an employee for journey from residence to work place or vice versa shall not be a taxable perquisite.

Valuation of Perquisite in respect of Vehicle other than Motor Car

The facility provided by employer is taxable in the hands of employee on the following basis:

Owned by	Maintained by	Used for	Taxable Value of perquisite	Who is Chargeable
Employer		Office purpose	Nil	Not Applicable
		Personal purpose	Actual Maintenance + Depreciation @ 10% of Original cost	Specified employee
		Both purpose	Reasonable proportion of (Maintenance + Depreciation @ 10% of Original cost)	Specified employee
Employee	Employer	Office purpose	Nil	Not Applicable
		Personal purpose	Actual Maintenance	All employee
		Both purpose	Actual expenditure incurred by the employer as reduced by Rs 900 p.m. or as reduced by higher sum if prescribed conditions (as discussed in case of Car facility) are satisfied.	All employee

Valuation of perquisite in respect of Free Domestic Servants [Rule 3(3)]

Value of perquisite is determined as under:

Servant appointed by	Taxable value of perquisite	Taxable in hands of
Employer	Actual cost to the employer is taxable as perquisite	Specified employee
Employee	Actual cost to the employer is taxable as perquisite	All employee

Notes

If rent-free accommodation (owned by the employer) is provided with gardener then gardener's salary and maintenance cost of garden shall not be taxable. [Circular No.122 dated 19/10/1973]
Any amount charged from the employee for such facility shall be reduced from above value.
Domestic servant allowance given to employee is fully taxable.

Gas, electricity or water facility [Rule 3(4)]
It is taxable on the following basis:

Case	Taxable value of perquisite		Taxable in the hands of
	Facility is provided from own sources	Facility is provided from other agency
Facility is in name of employee	Manufacturing cost to the employer	Prices paid to such agency	All employees
Facility is in name of employer			Specified employees

Where the employee is paying any amount for such facility, the amount so paid by employee shall be reduced from the value determined above.

Valuation of perquisite in respect of free education [Rule 3(5)]

Taxable value of perquisite is as follows:

Case	Taxable Value
Facility provided to employee	Not taxable
Facility provided to family member
Facility provided in an institution owned by the employer	Child of the assessee : Cost of such education in similar institution subject to an exemption of Rs.1000 p.m. per child shall be taxable. Other family member : Cost of such education in similar institution shall be taxable.
Facility provided in any institution (not owned by the employer) by reason of his being in employment.
Reimbursement of education expenditure to employee.	Actual reimbursement shall be taxable. Such reimbursement of tuition fee shall also be taxable in the hands of Central Government employee. ( Circular letter No 35/7/65"IT(B) dt 12/2/19 65 )

Who is chargeable

Case	Taxability in the hands of
In case of reimbursement or School fee of family member of the employee paid by the employer directly to school	All employee
In any other case	Specified employee

Notes

Rs.1000 per month per child shall be exempted without any restriction on number of children.
Child includes adopted child, stepchild of the assessee, but does not include grandchild or illegitimate child.
Any amount charged from the employee for such facility shall be reduced from the above value.
Contribution made under an Educational Trust, created for the children of particular group of employees, is not taxable.

Valuation of perquisite in respect of Free Transport [Rule 3(6)]

The facility provided by employer is taxable in the hands of employee on the following basis:

Case	Treatment
If employer is engaged in transportation business.	Amount charged from public for such facility is taxable in the hands of specified employee .
In any other case	Actual cost of employer for such facility is taxable in the hands of all employees .

Notes

In case above facility is provided to employees of Railways & Airlines, nothing shall be chargeable to tax.

Any amount charged from the employee for such facility shall be reduced from the above value.
Conveyance facility provided to the employee for journey between office and residence is not taxable.

Valuation of perquisite in respect of interest free loan or concessional rate of interest [Rule 3(7)(i)]

Perquisite in respect of interest free loan or loan at concessional rate of interest to the employee or any member of his household by the employer or any person on his behalf, is not taxable if aggregate amount of loan given by the employer (or any other person on his behalf) does not exceed Rs.20000.

The taxable value of such perquisite shall be determined as per the rate as on the 1st day of the relevant previous year charged by the State Bank of India in respect of loans for the same purpose advanced by it. Rate chart applicable for the A.Y . 2011-12 and 2012-13 is given below :

Purpose of the loan	Amount of loan	For A.Y. 2011-12	For A.Y. 2012-13
Housing loan (for acquiring house and not for repairs thereof)	Upto Rs.30 lakh	8%	8.75%
	Above Rs.75 lakh & Upto Rs.5 crore	8%	10%
	Above Rs.5 crore	8%	10.25%
Car Loan for new car (for acquiring conveyance and not for repairs thereof)	Below Rs.5 lakh	8%	11.25%
	Rs.5 lakh or above	8%	11%
Two Wheeler loan (for acquiring conveyance and not for repairs thereof)		15.75%	16.50%
Education loan	Up to Rs.4 lakh	11.25%*	12%#
	Above Rs.4 lakh & Upto Rs.7.5 lakh	12.75%*	13.50%#
	Above Rs.7.5 lakh	11.75%*	12.50%#
Personal loan		16%	16.75%
Loan to employee to subscribe ESOP		14%	NA

# An interest rate concession of 0.50% is available to Girl Student availing Student Loans .
* An interest rate concession of 0.50% is available to Girl Student availing Student Loans . Further, interest rate for laon availed under SBI Scholar Loan Scheme is 10.25%

Notes

Maximum outstanding monthly balance: Interest is calculated on the maximum outstanding monthly balance. Maximum outstanding monthly balance means the aggregate outstanding balance for each loan as on the last day of each month.
Loan for medical treatment : Nothing is taxable if loan is given for medical treatment of the employee or any member of his household in respect of diseases specified in rule 3A . However, such exempted loan will not include the amount that has been reimbursed by an insurance company under any medical insurance scheme.
Concessional interest : Any interest paid by the employee to the employer for such loan shall be reduced from the above computed value. If rate of interest charged by the employer is higher than the above rate, nothing is taxable as perquisite.
Amount on which interest shall be calculated : If loan amount is more than Rs.20000, interest shall be levied on total loan amount, rather than the excess amount.

Travelling / Touring / Holiday Home expenditure on Holiday [Rule 3(7)(ii)]
Valuation of perquisite in respect of travelling, touring, holiday home or any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee or any member of his household is taxable in the hands of all employees as per the following table:

Case	Taxable value of perquisite
Where such facility is maintained by employer and is not available uniformly to all employee	Notional cost of such facility. In other words, value at which such facilities are offered by other agencies to the public.
Where the employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him	The amount of expenditure so incurred for the accompanying member of his household.
Where any official tour is extended as a vacation	The value will be limited to the expenses incurred in relation to such extended period of stay or vacation.
In any other case	Amount incurred by the employer.

Notes: Any amount charged from employee shall be reduced from the above determined value.

Valuation of perquisite in respect of free meals/refreshment [Rule 3(7)(iii)]

The facility provided by employer is taxable in the hands of employee on the following basis:

Case	Tax Treatment
Tea, snacks or other non-alcoholic beverages in the form of light refreshment provided during office hours (including over-time)	Nil
Free meals provided during office hours in: - Remote area; or - An offshore installation	Nil
Free meals provided by the employer during office hours: - At office or business premises; or - Through paid vouchers which are not transferable and usable only at eating joints.	Expenditure on free meals in excess of Rs.50 per meal shall be taxable perquisite to the extent of excess amount in hands of all employees.
In any other case	The actual expenditure incurred by employer as reduced by amount charged from employee for such lunch or meal shall be taxable in the hands of all employees. i.e. [Actual expenditure to employer " Amount charged from employee]

Remote area means an area located at least 40 k.m. away from a town having a population not exceeding 20000 based on latest published census.

Gift, voucher or token given by employer [Rule 3(7)(iv)]
The value of any gift, voucher, or token (in lieu of which any gift may be received) given to the employee (or any member of his household) on ceremonial occasion or otherwise by the employer shall be taxable in the hands of all employees . However, gift, voucher or token upto Rs.5000, in aggregate , during the previous year, shall be exempted.

Notes

Where worth of gift is in excess of Rs.5000 then amount in excess of Rs.5000 shall be taxable.
No such exemption (Rs.5000) is available on gift made in cash or convertible into money.

Credit Card [Rule 3(7)(v)]

Expenditure incurred by an employer in respect of credit card facility to employee shall be treated as under:

Case

Tax Treatment

Where such credit card is used wholly and exclusively for office purpose and specified conditions # are satisfied.

Nil

Where expenses (including membership and annual fees) are incurred by the employee or any member of his household, which is charged to a credit card (including any add-on card) provided by the employer or otherwise, are paid or reimbursed by the employer.

If directly paid by the employer
Any amount incurred by the employer as reduced by amount charged from the employee shall be taxable in the hands of all employees

If amount reimbursed by the employer
Any amount reimbursed by the employer shall be taxable in the hands of all employees .

# Specified conditions to be fulfilled to claim that expenses have been incurred wholly and exclusively for office purpose:

Complete details in respect of such expenditure are maintained by the employer which may, inter-alia, include the date of expenditure and the nature of expenditure; and
The employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duty.

Club Expenditure [Rule 3(7)(vi)]
Expenditure incurred by employer in respect of club facility to employee shall be treated as under:

Case	Tax Treatment
Where such expenses are incurred wholly and exclusively for office purpose and specified conditions are satisfied.	Nil
Where health club, sports and similar facilities are provided uniformly to all employees by the employer.	Nil
Where the employer has obtained corporate membership of the club and the facility is enjoyed by the employee or any member of his household	Amount incurred by employer for such facility shall be taxable perquisite in the hands of all employees. However, initial fees paid for obtaining corporate membership shall not be a taxable perquisite.
Any payment or reimbursement by the employer of any expenditure incurred (including the amount of annual or periodical fee) in a club by employee or any member of his household	If directly paid by the employer Any amount incurred by the employer as reduced by amount charged from the employee shall be taxable in the hands of all employees. If amount reimbursed by the employer Any amount reimbursed by the employer shall be taxable in the hands of all employees .

# Specified conditions to be fulfilled to claim that expenses have been incurred wholly and exclusively for office purpose:

Complete details in respect of such expenditure is maintained by the employer which may, inter alia , include the date of expenditure, the nature of expenditure and its business expediency ; and
The employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duty;

Valuation of perquisite in respect of use of movable assets [Rule 3(7)(vii)]

If employee (or any member of his household) uses any movable asset (other than the assets for which provisions have been made) belonging to employer, then such facility is taxable in the hands of all employees . The value of such benefit is determined as per the following table:

If the asset is owned by the employer	10% of the original cost of such asset.
If the asset is hired by the employer	Charges paid or payable by the employer

Notes

Any sum charged from the employee shall be reduced from the value determined as above.
Use of computer, laptop, etc. (as discussed earlier) is exempted perquisite.
Here movable asset does not include car.

Valuation of the perquisite in respect of movable assets sold by an employer [Rule 3(7)(viii)]

If the sale price is less than the written down value (calculated as per method and rate mentioned below) then the difference would be treated as perquisite and taxable in the hands of all employees .

Rates and methods of depreciation for different types of assets are as follow:

Types of asset	Rate of depreciation	Method of depreciation
Electronic items # /Computer	50%	Reducing balance
Motor car	20%	Reducing balance
Any other	10%	Straight line

# Electronic items here means data storage and handling devices like computer, digital diaries and printers. They do not include household appliances like washing machines, microwave ovens, mixers, etc.
Taxpoint : No depreciation shall be considered for a part of the year.

Other Perquisites

The value of any other facilities, benefits, amenities, services, rights or privileges (which is not discussed earlier) provided by the employer shall be determined on the basis of cost to the employer under an arms length transaction, as reduced by the employee's contribution, if any.