TDS on Salaries - Income Tax Department

3.3 Valuation of Perquisites: The taxable value of
perquisites in the hands of the employee is normally taken to be its
cost to the employer. However, there are specific rules for valuation
of certain perquisites laid down in Rule 3 of the I.T. Rules, which
have been revised vide I.T.(thirteenth Amendment) Rules 2009
w.e.f. 1/4/2010(vide notification 2/2009 dt. 12/1/2010- F.
No. 142/25/2009-SO (TPL)). Rule 3 now provides that the value
of perquisite provided by the employer directly to the
assessee(employee) or to any member of his household by reason
of his employment is to be determined in accordance of the sub
rules which are briefly given below.
3.3.1 Valuation of residential accommodation
provided by the employer(Rule 3(1)):-
(a) Union or State Government Employees - The value of
perquisite is the license fee as determined by the Central or
the State Government as reduced by the rent actually paid by
the employee.
(b) Non Govt. Employees –
(a)
(b)
Where the accommodation is owned by the employer
the perquisite is
(i) 15% of salary in cities having population exceeding
25 lakhs as per 2001 census ;
(ii)
(iii)
10% of salary in cities having population exceeding
10 lakhs but not exceeding 25 lakhs as per 2001
census ;
7.5% of salary in other areas.
Or
where the accommodation is taken on lease by the
employer the perquisite is the actual amount of lease rental
(c)
(d)
paid or payable by the employer or 15% of salary which
ever is lower, as reduced by the rent if any actually paid
by the employee.
Value of Furnished Accommodation - The value would be
the value of unfurnished accommodation as computed above
increased by 10% per annum of the cost of furniture (including
T.V./radio/refrigerator/AC/other gadgets). In case such
furniture is hired from a third party, the value of unfurnished
accommodation would be increased by the hire charges paid/
payable by the employer. However, any payment recovered
from the employee towards the above would be reduced from
this amount.
Value of hotel accommodation provided by the employer-
The value of perquisite arising out of the above would be 24%
of salary of the previous year or the actual charges paid or
payable to the hotel, whichever is lower. The above would be
reduced by any rent actually paid by the employee. It may be
noted that no perquisite would arise if the employee is provided
such accommodation on transfer from one place to another
for a period of 15 days or less.
3.3.2 Perquisite of motor car provided by the
employer Rule 3(2):-
(i)
(ii)
Where motor car is owned or hired by the employer and is
used wholly and exclusively in the performance of official
duties, no perquisite arises provided specified documents are
maintained.
Where the motor car is owned or hired by the employer but
used exclusively for private or personal purposes, the perquisite
is the actual amount of expenditure incurred by the employer
on running and maintenance including remuneration if any paid
to the chauffeur.
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