Employee Stock Options Plans (ESOPs) and its different variants like Employees Stock Purchase Plans, Stock Appreciation Rights, Stock Awards, etc, have been used by employers to attract, retain and motivate employees. ESOPs have been popular primarily in the knowledge-based industries like information technology, biotechnology, etc. However, in the recent past, they have gained prominence even in traditional industries like manufacturing.

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.

In A major relief to corporates who regularly make cross-border payments, the Supreme Court has stayed the order by the Karnataka High Court, issued a couple of months ago, that these companies have to deduct tax from all cross-border payments. The apex court gave the ad-interim order on December 18, 2009, on a special leave petition filed against the Karnataka High Court order in the CIT v/s Samsung Electronics case.

The perquisites value of a motor car provided by an employer both for official and personal use has been enhanced by Rs. 600 to 800 per month depending on the engine capacity of the car. Also, the perquisites valuation for employer-provided chauffeur in such cases has been increased from Rs. 600 per month to Rs. 900 per month.

The much awaited new rules have now been notified by The Central Board of Direct Taxes (CBDT) vide Notification dated 18 December 2009. The amended provisions will be retrospectively effective from 1 April 2009 onwards. The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) have in respect of accommodation provided by employer including in respect of accommodation in hotels is tabulated as under:

Limited Liability Partnership Act, 2008 (LLP Act) was passed by the Parliament in December, 2008. Some of the sections of the LLP Act were made effective on 1-4-2009. Sections relating to conversion of existing partnership firms and private as well as public unlisted companies into LLP have been brought into force on 31-5-2009. Sections relating to liquidation and winding up of LLP have not yet come into force. LLP Rules, 2009, have also been made and they have now come into force.

As a first step towards simplifying and bringing about structural changes in direct taxes, the new Direct Taxes Code („Code?) Bill 2009 has been released for public debate. This is expected to be presented in the winter session 2009 of the Parliament. The Code, once enacted, is proposed to be effective from 1st of April 2011.

The government should bring petrol and diesel under a uniform VAT structure of 8 per cent as the variation in state tax was putting additional burden of taxation, industry body Assocham today said. States sales tax on petrol varies from 33 per cent in Andhra Pradesh to 18.9 per cent in Manipur and on diesel from 34 per cent in Mumbai to 8.3 per cent in Tripura, the chamber said adding that entry tax/octroi is also levied on movements of crude in many states.

The applicant is a US-based manufacturer engaged in manufacturing of engineering goods and is also an R&D-based service provider. It entered a cost al ocation agreement with its India-based group company. The applicant raises invoices on the Indian group company for services rendered based on the formula given in the agreement. The question before the Authority for Advance Ruling was: “Whether payments made for availing services listed out in the agreement are taxable in India and if taxable whether it is liable to TDS under Section 195 of the Act?”