Income Tax on Advance Salary and Perquisites (Income Tax Act)
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This includes value of rent free accommodation given to assess by employer, value of any amenity granted free of cost/at concessional rate to an employee being the director or an employee having substantial interest in Company and value of any other fringe benefits.
What is included under Advance and Perquisites
· The value of rent-free accommodation provided to the assessed by his employer;
· The value of any concession in the matter of rent with respect to any accommodation provided to the assessed by his employer.
· The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
· Any benefit given by a company to an employee, who is a director thereof;
· Any benefit given by a company to an employee, being a person who has a substantial interest in the company;
· Any benefit given by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income under the head "Salaries" (whether due from, or paid or allowed by, one or more employer/s), exclusive of the value of all benefits or amenities, not provided for by way of monetary payment, exceeds Rs 50,000. However, nothing in this sub-clause shall apply to the value of any benefit provided by a company free of cost or at a concessional rate to its employees by way of allotment of shares, debentures or warrants, directly or indirectly under any Employees' Stock Option Plan or Scheme of the company offered to such employees in accordance with the guidelines, issued in this behalf by the Central Government. The use of any vehicle, provided by a company or an employer for journey by the assessed from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate for the purposes of this sub-clause.
· Any sum, paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessed ;
· Any sum, payable by the employer, whether directly or through a fund, other than a recognized provident fund or an approved superannuation fund or a Deposit-linked Insurance Fund, established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or, as the case may be, section 6C of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)], to effect an assurance on the life of the assessor to effect a contract for an annuity; and
· The value of any other fringe benefit or amenity as may be prescribed.
How are Perquisites Valued
For the purpose of computing the income chargeable under the head 'Salaries,' the value of perquisites provided by the employer directly or indirectly to the assessed (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with Rules 3 of the Income Tax Act.
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