Tax Ready Reckoner

Under Section 17(2) of the Income Tax Act, 1961, certain perquisites are taxable only for “specified employees”, while they remain exempt for others. Below is a detailed breakdown of these perquisites, the criteria for “specified employees,” and their valuation rules (as per FY 2024-25/AY 2025-26): 1. Who is a “Specified Employee”? An employee is classified as “specified” if they meet any of the […]

Here’s a detailed breakdown of tax-free perquisites applicable to all employees under the Income Tax Act, 1961 (as of FY 2024-25/AY 2025-26). These benefits are exempt from tax regardless of the employee’s designation or salary level: 1. Medical Benefits Employer-run medical facilities: Treatment at hospitals/dispensaries maintained by the employer for employees or their families is fully exempt . Reimbursements: Up to ₹15,000/yearfor medical expenses

Under the Income Tax Act, 1961, rent-free or concessional accommodation provided by an employer is a taxable perquisite for employees. The valuation depends on whether the employee is in the private sector, government sector, or a specified employee. 1. Taxability & Valuation Rules (A) For Private Sector Employees (Non-Government) The taxable value is calculated as: 15% of salary(for cities

When an employer provides accommodation in a hotel, guest house, or similar facility, its taxability depends on: Duration of stay Purpose of stay (official vs. personal) Nature of employment (transfer, project, etc.) 1. When Hotel Accommodation is Taxable (A) For Non-Government Employees (Private Sector) Fully Taxableif the stay is for personal reasons (e.g., vacation, non-work-related stay). Taxable Value

The following benefits are taxable for all employees, irrespective of their salary or designation. These must be reported in Form 16 and included in taxable salary income. 1. Rent-Free/Concessional Accommodation Taxable Value: Private Employees:5%–15% of salary (based on city population). Employees:License fee minus rent paid. Furnished Accommodation:Additional 10% of furniture cost or actual hire charges. 2. Interest-Free/Concessional Loans

Here’s a detailed breakdown of the valuation of motor car perquisites under Rule 3(2) of the Income Tax Act, along with examples in a table format: Valuation of Motor Car Perquisites [Rule 3(2)] Perquisites related to motor vehicles are taxable under Section 17(2) of the Income Tax Act. The valuation depends on: Ownership(employer or employee-owned). Usage(official, personal, or mixed).

(A) Valuation of Perquisites: Sweeper, Gardener, Watchman, or Personal Attendant [Rule 3(3)] Under Rule 3(3) of the Income Tax Rules, 1962, the provision of domestic servants (sweeper, gardener, watchman, or personal attendant) by an employer is considered a taxable perquisite for specified employees. Below are the key aspects of valuation and taxability: 1. Applicability & Taxability Taxable for:Only specified

Retirement benefits such as pension, gratuity, provident fund, and leave encashment are taxed differently under the Income Tax Act, 1961. Below is a detailed breakdown of their valuation and tax treatment: 1. Pension Income Pension is classified into commuted (lump-sum) and uncommuted (periodic) pensions. A.  Commuted Pension (Lump-Sum Payment) EMPLOYEE TYPE TAXABILITY EXEMPTION FORMULA Government Employees Fully exempt N/A Non-Government Employees Partially

Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for long-term service. Its tax treatment depends on: Type of employee(government/private sector). Coverage under the Payment of Gratuity Act, 1972. Amount received vs. exemption limits. 1. Tax Exemption Rules for Gratuity Government Employees Fully exemptfrom tax, regardless of

Pension is a periodic payment made to an employee after retirement. Under Section 17(1)(ii) of the Income Tax Act, 1961, pension is treated as “Salary Income” and taxed accordingly. The taxability depends on whether the pension is commuted (lump-sum) or uncommuted (periodic). 1. Types of Pension & Their Tax Treatment TYPE OF PENSION TAXABILITY EXEMPTION (IF ANY) Uncommuted Pension (Monthly Payments) Fully taxable as