The basis of valuation of education facilities provided by employer:
TRAINING OF EMPLOYEES
Amount spent for providing free education facilities to, and training of the employee, is not taxable. Thus, any type of job oriented training given to its employee by employer is not taxable in the hands of employee.
FIXED EDUCATION ALLOWANCE
Fixed education allowance given in cash by the employer to the employee to meet the cost of education of the family members of the employee is exempt from tax to the extent of Rs. 100 per month per child (up to a maximum of two children). Moreover,any allowance granted to an employee to meet hostel expenditure of his child is exempt from tax to the extent of Rs. 300 per month per child for a maximum of two children.
PAYMENT OF SCHOOL FEES OF EMPLOYEES’ CHILDREN
School fees of the family members of the employees, paid by the employer directly to the school, is taxable as a perquisite in all cases.
REIMBURSEMENT OF SCHOOL FEES OF EMPLOYEES’ CHILDREN Reimbursement of expenditure, incurred for the education of the family of the members of the employee, is taxable as a perquisite in all cases.
EDUCATIONAL FACILITY IN EMPLOYER’S INSTITUTE
|Different situation||Amount chargeable to tax|
|Where the educational institution is owned and maintained by the employer and educational facility is provided orwhere such educational facility is provided in any institute by reason of employee’s employment with the employer, like employees of NCPEC are getting education facility in the schools maintained by NHPC-
Where educational facility is provided to employee’s children
§ Where cost of education or value of such benefit does not exceed Rs. 1,000 per month per child (no restriction on number of children)
|§ Where such amount exceed Rs. 1,000 per month per child||Cost of such education in a similar institution in or near the locality minus Rs.1,000 per month per child minus amount paid or recovered from the employee|
|Where educational facility is provided to member of his household (other than children)
– Grand children and other member of household are included in this rule of perquisite valuation.
|Cost of such education in a similar institution in a similar institution in or near the locality (-) amount paid or recovered from the employee|
TRUST FOR THE BENEFITS OF EMPLOYEE’S CHILDREN
If contribution is made under an educational trust,created for the named children employees, the same is not taxable.
Payment of the scholarship amount was never received by the employee but by the children concerned or deposited in the special amount referred to in the scheme. Hence no perquisite in the hands of employee concern.
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