Scheme of the Act provides that after the employer deducts from the salary of the employee the tax and pays the same to the Central Government, a Tax Deduction Certificate is furnished to the employee and it is for the employee to claim before the Assessing Officer in the assessment proceedings and get a determination done and in case he succeeds before the Assessing Officer, he will be entitled to refund out of the amount of tax deducted at source by the employer.

ITAT Delhi held that the perquisite value of rent free accommodation (RFA) provided by the employer being shared between expatriates should be on a proportionate allocable basis provided it is supported by appropriate evidence.

The Legislature, by inserting sub-clause (vi) to clause(2) of section 17 with effect from 1-4-2009, has prescribed fringe benefits or amenities which are treated to be perquisite. Rule 3(7) prescribes the amenity/benefit by way of valuation; it has the status of the benchmark; if the valuation results in a positive figure, i.e., State Bank of India rate, rate at which the employer grants loan, then it would be treated as a concession; thus, the rule lays down an express method and provides for a basis of ascertaining the value for concession.

With virtually no reprieve from the tax burden on their pay packages and continuing anomalies and inequities, the new rules for valuation of perquisites announced by the Central Board of Direct Taxes (CBDT) on December 18, 2009 have hugely disappointed millions of salaried employees.

New perk rules :- Under the new perquisite rules, a distinction is to be made between the car owned by the employer and the car owned by the employee, as the value of the tax perquisite in the two scenarios varies considerably. Even though there could be different permutation and combination, under which the car benefit could be provided by the employer to the employee, this article primarily focuses on two scenarios where the car is either owned by the employer or employee and the car expenses are met/reimbursed by the employer.

Last week, CBDT issued a notification on how each perquisite provided to a salaried employee should be taxed. It is applicable with retrospective effect, from April 1 2009. The guidelines cover every perk: home accommodation to gifts to educational benefits. The most important change, though, is taxation of car facilities.

After much wait, the new perquisite rules have now been notified last month, which are effective retrospectively from April 1, 2009. By and large, the perquisite rules in respect of rent-free accommodation are similar to the erstwhile rules. Nevertheless, the following points merit attention:

Employee stock options (ESOPs) is a significant employer-granted benefit that too is subject to the above FBT /perquisite-based taxation system. In fact, it almost seems as if the authorities cannot quite make up their minds as to how they wish to tax shares given to employees by their employers on a concessional basis. Having been subject to various changes in their valuation norms, the following is the latest position:

This article summarizes Notification No. 94/2009/F. No. 142/25/2009-SO(TPL) dated 18 December 2009 (Notification) issued by the Central Board of Direct Taxes (CBDT)that substitutes Rule 3 (Rule) relating to valuation of perquisites arising from employment. The new Rule is effective from 1 April 2009 and is largely similar to the erstwhile Rule. All employers, including employers who were liable to Fringe Benefits Tax (FBT) prior to its removal, will now be covered under the new Rule. They would be required to compute the taxable value of perquisites provided to the employees as per the new Rule, with effect from 1 April 2009.

It’s not often that the taxman comes to sting you five-and-a-half months after the budget speech. But finance minister Pranab Mukherjee’s decision to abolish the fringe benefits tax (FBT) last July is only now being clarified by the taxman, and the net result is that you will pay more tax.Not everybody, though. The abolition of FBT affects those taxpayers whose salaries have a heavier weighting of perquisites like official accommodation, servants, car allowance, company credit card, and employee stock option plans (esops), among other things.