VALUATION of perquisites has always been a bone of contention. To overcome many of such irritants, the Finance Minister in the Finance Act, 2007 had inserted a deeming provision to define concession in the matter of rent for the purpose of determining the perquisite value. It has also reduced the rate of valuation of perquisite in the nature of concessional rent accommodation and leased accommodation with retrospective effect from 1 st day of April, 2006, that is with effect from assessment year 2006-2007. This had necessitated similar reduction of rates in case of both rent-free and concessional rent accommodations and leased accommodation in Table I of rule 3 with retrospective effect from 1 st day of April, 2006, that is in relation to assessment year 2006-2007 and subsequent years.
Further, the Finance Act, 2005 had inserted a new Chapter XII-H in the Act, relating to levy of Fringe Benefit Tax (FBT) on the employer with effect from 1 st April 2006, i.e. applicable for assessment year 2006-07 and subsequent years. Accordingly, rule 3 was amended in 2005, to avoid double taxation on certain items. Since, Chapter XII-H relating to FBT is not applicable to the employer being an individual or a Hindu undivided family or any fund or trust or institution eligible for exemption under clause (23C) of section 10 or registered under section 12AA, rule 3 was required to be amended so as to include valuation of perquisite in case of benefits provided by such employers to its employees.
Accordingly, sub-rules 2, 6, 7 (ii), (iii), (iv), (v) and (vi) have been inserted to provide for such valuation. Sub-rule 7(ix) has been inserted to provide for valuation of any other benefit or amenity, etc., in residual cases relating to any employer. These sub-rules will take effect from the 1 st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years (See Notification 271)