New Perquisites Rules for A.Y.2010-11

People living on salaries who are facing the pressures of the inflation more than any other sections of the society is to face another setback. The new perquisite valuation rules announced by the Central Board of Direct Taxes (CBDT) add fuel to the fires of salaried class woes. These new rules are enforced due to the abolishment of fringe benefit tax (FBT). Five and a half months long gestation period aroused hope of a bit of relief, but pushing aside any such expectation, the latest perquisite rules have been observed to be the same as the old rules except for some changes in the norms for valuation of car and driver, stock options and accommodation given to government employees upon deputation to a body or undertaking which is in the control of such a government.

There has been a notable change in the taxation of the car and driver provision given by the employer. Using motor car for official works is still tax-free and also there is no change in the norms of valuation for the provision of motor car owned by the employer to the employee exclusively for private purposes. The modification in the norms of valuation was made for those cases in which the motor car and the driver provision is offered to the employee by the employer for both official and personal purposes.

The valuation norms of such cases have been drastically increased by 50%, but still the taxability in these cases is still just nominal when the expenditure that could be incurred on such facilities is considered. Likewise the relief for utilization of the cars that are owned by the employee for official and personal purposes is augmented by 50% which brings in only a marginal benefit to the employees. There are not many changes in the valuation norms of the accommodation provided to the central or state government employees except that when they are on deputation to any body or undertaking which is under the control of the specific government, they would stand to lose as such a deputation is no more considered to be equal to valuation of accommodation offered to the normal government employees.

Major important disheartening feature noticeable belongs to the section of meal coupons offered by an employer to the employees of the firm. The non-taxable threshold for these cases still remains at Rs.50 per a meal per one day, but this limit was at Rs.100 under the FBT terms. Considering the present conditions of inflation some relief regarding this section was expected by raising the minimum limit to a palatable level. Even stock options were dealt likewise. Stock incentives are reintroduced as ‘perquisite’ present in the hands of the employees of the firm.

New rules of valuation are exactly same as the FBT rules regarding this matter except that the value of benefit would be calculated at the time of ‘exercise’ of the choices. New rules also lack clarification regarding attribution of benefit on account of stock options for the expatriates. Notable happy modification is tax exemption on usage of telephone including mobiles. See:  Notification No. 94/2009/ F.No.142/25/2009-S O (TPL), dated 18-12-2009 (for all changed rules)

We will try to cover all perquisites valuation accordingly new changed rules of perquisites. So please subscribe you email before leaving this page, so we can inform you as it is updated on the blog.

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