Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: due date for vat payment :: form 3cd :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: empanelment :: cpt :: VAT Audit :: ACCOUNTING STANDARD :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS
 
 
« General »
 Supreme Court agrees to hear plea on imposition of service tax on lawyers
 India's tax department signs 3 advance pricing agreements
 Income Tax Dept to probe deeper into suspicious bank accounts
 Modi may lower taxes to spur demand in his budget sops
 Tax breather for foreign investors: All you need to know
 What the increase in tax collections does not tell us about Indian economy post demonetisation
 India’s crazy retrospective tax on foreign funds will tarnish country’s reputation
 How tax related, PAN grievances can be resolved through E-Nivaran
 Tackling income tax exemptions for equities and agriculture
 Amfi wants tax benefits for retirement plans
 Top five factors which could chart market direction in the coming week

Tax on perks to be notified next
September, 25th 2009

The finance ministry proposes to notify a system to tax employee perquisites by next month. The list of taxable perks will be similar to the one specified under Rule 3 of the Income-Tax Rules. We are finalising a list of taxable perquisites, which would be formally notified by October, a finance ministry official said.

Rule 3 was largely rolled back in 2005 with the introduction of the fringe-benefit tax. However, with the abolition of FBT in Budget 2009-10, from this year itself employees will be taxed for virtually their entire range of benefitsfrom Esops and contributions to superannuation funds to company accommodation, paid-for holidays and discounted meals.

The thorny issue of valuation is, however, still being sorted out. The Central Board of Direct Taxes is currently looking at two proposals: to broadly stick to the valuation norms specified in Rule 3, or tax all perks at market rates.

The latter would punch a significantly larger hole in the take-home pay of employees, but would boost direct tax collections in a year when CBDT has an uphill task of garnering Rs 4 lakh crore.

Rule 3, on the other hand, prescribes specific values for various perks. For example, it stipulates that company accommodation for private sector employees should be taken as 15 per cent of their salary.

Accommodation taken on lease by an employee is valued as the same as rent paid. Similarly, the value of a vehicle provided exclusively for official purposes would be taken as nil.

A key concern, however, is the prospect of a sudden surge in employees tax liability this year. Keeping in mind the fact that the onus of paying tax on perks now falls on employees and that almost half the year has passed, the rules should be kept largely on the same lines as current provisions, said Ernst & Young partner Amitabh Singh.

Singh makes a significant point. Unlike the earlier FBT regime, when the effective tax rate on perks was just around 7 per cent, these will now be added to an employees pay and taxed at the same rate as salary income. Thats a tough ask at a time when most companies have frozen salaries or imposed wage cuts.

The currently salaries of employees are benchmarked on the understanding that no tax was to be paid by them on benefits under FBT. So, it is important that the new rules on the valuation of perquisites do not cast undue burden on employees, given the recessionary conditions, said PricewaterhouseCoopers executive director Rahul Garg.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions