Rule 3(g) of Income-tax Rules – Valuation of perquisite on account of services of household servants

1. Board’s Instruction No. 133 [F. No. 40/25/69-IT(A-I), dated 10-12-1969 (Annex) provides that the taxable perquisite in the hands of the employee on account of the services of gardeners, night watchmen and sweepers provided by the employer should be calculated on the following ad hoc basis :—

     (i)    Sweeper – 75 per cent of actual wages or Rs. 60 p.m., whichever is less;

   (ii)   Gardener; and

  (iii)    Watchman – 50 per cent of actual wages or Rs. 60 p.m., whichever is less.

2. The Board has received representation to clarify whether reimbursement by the employer of wages of sweeper engaged by the employee is covered by the above instruction.

3. Board’s Instruction No. 133, dated 10-12-1969, is applicable only when the services of sweeper are provided by the employer, i.e., the sweeper is recruited by the employer and remunerated by him but his services are placed at the disposal of the employee.  Therefore, the reimbursement of wages of sweeper, gardener or watchman engaged by the employee is fully taxable as income from “Salaries” in the hands of the employee.

Circular : No. 662, dated 27-9-1993.

ANNEX – PARA 1 OF INSTRUCTION NO. 133, DATED 10-2-1969 REFERRED TO IN CLARIFICATION

“lt has been decided by the Board that the taxable perquisite in the hands of the employee on account of services of gardeners, night watchmen and sweepers, provided by the employer should be calculated on the following ad hoc basis :

Sweeper : 75 per cent of actual wages or Rs. 60 per month, whichever is less.

Gardener :  50 per cent of actual wages or Rs. 60 per month, whichever is less”

Watchman.

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