Tax Ready Reckoner – Page 72 – Direct and Indirect Taxes with Tax Ready Reckoner

Allowance- Meaning, Types and Treatment for Calculating Taxable Salary Income

1. Allowances- Income under the head Salaries Allowance is a fixed monetary amount paid by the employer to the employee for meeting some particular expenses, whether personal or for the performance of his duties. These allowances are generally taxable and are to be included in the gross salary unless a specific exemption has been provided […]

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Perquisites [(Section 17(2)]- Income under the head Salaries

Salaries / Gross Total Income, Perquisites

1. Perquisites [(Section 17(2)]-Definition Section 17(2) of the Income-tax Act, 1961 gives an inclusive definition of ‘perquisite’. As per this section ‘perquisite’ includes: (i) the value of rent-free accommodation provided to the assessee by his employer; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee

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Perquisites- Rent Free Accommodation or Accommodation provided at Concessional Rate

Salaries / Gross Total Income, Perquisites

Accommodation provided to the employee may be— (i) unfurnished (ii) furnished Further, such accommodation may be provided: (a) rent free; or (h) at concessional rate. As per amended rule 3(1), the valuation of accommodation should be done as under: (A) Accommodation provided by the Government to its employees Where the

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Perquisites – Fringe Benefits or Amenities which shall be Taxable Perquisite in the hands of All Employees

Salaries / Gross Total Income, Perquisites

The rules for valuation of specified fringe benefits or amenities arc as under: 1. Interest Free Or Concessional Loans [Rule 3(7)(i)] The value of the benefit resulting from loans made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall

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Perquisites – Valuation of Motor Car / Other Vehicles [Rule 3(2)]

Salaries / Gross Total Income, Perquisites

As already discussed, motor car/other vehicles, provided by the employer, is a perquisite only for specified employees because it is a facility provided by the employer to the employees. On the other hand, if the car belongs to the employee and the expenses of running and maintenance of that car are met by the employer,

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Valuation of Various Perquisites – for Calculating Salary Income

Salaries / Gross Total Income, Perquisites

1. Provision by the employer of services of a Sweeper, a Gardener, a Watchman or Personal Attendant [Rule 3(3)] The value shall be the actual cost to the employer i.e. the total amount of salary paid or payable by the employer or any other person on his behalf for such services as reduced by any

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Valuation of PERQUISITES- for Calculating Taxable Salary Income

Salaries / Gross Total Income, Perquisites

1. Perquisites [(Section 17(2)]- Income under the head Salaries Section 17(2) of the Income-tax Act, 1961 gives an inclusive definition of ‘perquisite’. As per this section ‘perquisite’ includes: (i) the value of rent-free accommodation provided to the assessee by his employer; (ii) the value of any concession in the matter of rent respecting any

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Valuation of Retirement Benefits – for Calculating Taxable Salary Income

Salaries / Gross Total Income

1. Gratuity Gratuity is a payment made by the employer to an employee in appreciation of the past services rendered by the employee. Gratuity can either be received by: (a) the employee himself at the time of his retirement; or (b) the legal heir on the event of the death of the employee.

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Section 16 – Deductions from Salaries

Salaries / Gross Total Income

So far, we have discussed what are the various incomes, allowances and perquisites which are exempt and which are to be included in gross salary. From the gross salary so computed, the following three deductions are allowed under section 16 provided the employee does not opt to be taxed under section 115BAC: (i) Standard

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Tax Treatment of Provident Fund for Calculating Taxable Salary Income

Salaries / Gross Total Income

Provident Fund Scheme is a welfare scheme for the benefit of the employees. Under this scheme, certain sum is deducted by the employer from the employee’s salary as his contribution to the Provident Fund every month. The employer also contributes a certain percentage of the salary of the employee to the provident fund. These contributions

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