Definitions

• What is assessment??
• What is assessment year???
• Period of 12 months
• Usually starting from 1st April to 31st March
• Also called as “Tax Year” or financial year
• The income of previous year is assessed in this
year
 Previous year
• Accounting or income year
• E.g.
• What will be the previous year for assessment
year 2010-11
• Newly set up business
• Exceptions
 Assessee
• The person is liable to pay tax or any some of
money under this is called an asseessee.
• Assessee is the person who is also responsible for
the payment or the loss or the amount of refund
due to him or to such other persons.(e.g.)
• The person who is deemed to be an
asseessee(e.g)
• The person who is deemed to be an asseessee in
default.(e.g.)
 Person

• "Person" includes
• an individual
• a Hindu Undivided Family (H.U.F.)
• a Company
• a Firm .
• an Association of Person (AOP) or Body of Individuals
(BOI), whether incorporated or not;
• a Local Authority and
• Every Artificial Juridical Person not falling within any of
the preceding categories.
 Income

• Section - 2(24) of the Income-Tax Act gives a

statutory definition of income.The definition
states various receipts which are included in
income which is as under:
• (1) Profits and gains.
• (2) Voluntary contributions received by a trust.
• (3) Amounts under the head of salary,
 Contd….
• The value of perquisites or profits in lieu of salary.
• (5) The value of any benefit or perquisite
obtained from a company by a director or a
person having substantial interest in the company
or by a relative of a director.
• (6) The value of any benefit or perquisite arising
from the business or profession (whether
received in cash or not).
• (7) Any capital gains.
 Contd…
(8) Dividend
• (9) Casual income e.g. winnings from lottery,
prize of crossword competition, races
including horse races, card games etc.
• (10) Annuity income received or receivable.
• (11) Any sum chargeable under Section: 28 (ii),
(iii), 41(1): or 59.
 Contd…..
• Any sum received by employer from his employees
as contributions to any fund for the welfare of such
employees.
• (13)Any sum received under a keyman insurance
policy including bonus. In addition to the aforesaid
receipts any other receipt is also taxable.
• (14)Amounts taxable which include salary, bonus,
commission or other remuneration received or
receivable.
 Gross salary
• According to Section-14 the income of an
assessee is computed under the following five
heads:
(1) Salary
(2) Income from house property.
(3) Profits and gains of business or profession
(4) Capital Gains.
(5) Income from other sources
 Contd….
• The aggregate income under these heads is
termed as gross total income. In other words,
the gross total income means total income
computed in accordance with the provisions
of the Act before making any- deductions
under Section : 80 CCC to 80 U. :
 Agriculture income
• 2. Definition of Agricultural income: Section : 2 (1A)
of income-tax Act defines Agricultural Income as :
-
• Any rent or revenue derived from land which is
situated in India and is used for agricultural purpose.
• Any income derived from such land by agricultural
operations.
• Income from building used for agricultural purpose.
 Contd….
• Rent or Revenue derived from land
[Section-2(1A)(a)] :
• It is not necessary that landlord should be
cultivating the land himself. If he has given the
land to any other person for cultivation, the
rent received by him is an agricultural income.
• The rent may be received in cash or in kind.
 Contd….
• Cultivation of the land would involve some
basic operations on the land itself and not
merely on the growths from the land.
Examples of such basic operations are tilling of
the land, sowing of seeds, planting etc.
• Subsequent operations include weeding,
digging the soil around the growth, removal of
undesirable undergrowths etc.
 Contd….
• Agricultural not only include the raising of
food grains and food products for men and
animals but also raising of commercial crops
such as tea, coffee, tobacoo, cotton, sugar-
cane, betel, rubber etc.
 Contd….
• Income from processing of Agricultural
Produce:
• If agricultural produce are not in a saleable
sate, they have to be further processed, in
order to make them marketable. Any income
derived from such processing will also be
treated as agricultural income.
• Agricultural House Property:
• Income from agricultural house property will be
treated as agricultural income if-
• The house property is situated on or in
immediate vicinity of an agricultural land.
• The occupier requires it as a dwelling house, or
store house.
• The land is assessed to land revenue in India or is
subjected to local rate.
 Contd….
• The land is neither assessed to land revenue
nor subjected to local rate, (i) it is situated
outside municipal area (Population of that city
is not more than 10,000) or (ii) beyond the
specified distance of 8 kms. from a notified
municipal area.
 Contd….
• . Partly Agricultural Income: The following
are partly agricultural income:
• Income derived from the sale of tea grown by
the seller in India is treated as agricultural
income to the extent of 60% and remaining
40% is taken as non-agricultural income and
hence it is taxable.
• The following incomes are not treated as
Agricultural Income:
• (1) Royalty income of mines. (2) Income from
stone quarries. (3) Income from fisheries. (4)
Income from safe of earth for brick making. (5)
Income of salt produced by flooding the land with
seawater. (6) Remuneration received by a manager
of an Agricultural Company. (7) Agricultural
Income earned from a land situated outside India.
 Contd….
• (8) Income from dairy and cattle breeding. (9)
Ground rent for permanent shops at bazars.
(10) Income from supply of water for irrigation
purposes. (11) Dividends received by
shareholders from a company which is
engaged in agricultural operations. (12)
Income derived from land letout for storing
crops. (13) Interest on arrears of rent payable
in respect of agricultural land.
 Contd….
• (14) Commission earned by landlord for selling
agricultural produce of his tenant. (15) Income
from butter and cheese-making. (16) Income
derived from land let-out for processing salt.
(17) Income derived from T.V. Serial shooting
in the farm.
 What is amalgamation?
• Condition (1): all the properties of the
amalgamating company immediately before
the amalgamation should become the
property of the amalgamated company by
virtue of amalgamation.
• (2) all the liabilities of the amalgamating
company.
 Classification of income
• Indian income
• Foreign income
 SCOPE OF TOTAL INCOME & ITS TAXABILITY

No. Particulars of Income Residential Status & Tax Liability

(During PY:2008-09)
ROR RBNOR NR
1 Income Received in India Taxable Taxable Taxable
2 Income deemed to be Taxable Taxable Taxable
received in India.
3 Income which accrues or Taxable Taxable Taxable
arises in India.
4 Income which is deemed to Taxable Taxable Taxable
accrue or arise in India.
5 Income which accrues or Taxable Taxable Not Taxable
arises outside India from a
business controlled in India
or a profession set up in
India
6 Income accruing or arising Taxable Not Taxable Not Taxable
outside India
 Tax planning – Exempted Income
 Agricultural income – Agricultural land in India
– Used for agricultural purpose- Rent or
revenue from the land – Income from
agricultural operations on the land to render
produce fit for market
 Payments to a member from HUF
 share of profit received by partner from the
firm
 Salary received by foreign citizen from
foreign company provided stay is not over 90
days
 Contd….
• Tax paid on behalf of foreign companies / non
resident Govt. agreement before 1-6-02
– The taxpayer should be the foreign company
– It has the income by the way of royalty & technical
services
– such royalty should received from the central
govt.or stat govt. under agreement made after
31-3-76 & before 1-6-02

• If the above conditions are satisfied, the tax liability

of the foreign company born by the payer will not be
taxable in the hands of the FC
 Tax planning – exempted income
• 8. For employees- Gratuity – Provident Fund –
Leave salary – Retrenchment compensation –
L T C – Compentation under VRS- Education
allowance – Hostel allowance – H R A –
Entertainment allowance – Perquisites under
Fringe benefit tax payed by employee.
 Tax Planning- exempted income
• Scholarship for cost of education
• Income of scientific research association
• income of professional bodies – contribution

• Professional bodies should situated in India for the

purpose of regulating, control, supervision or
encouragement of the law, accountancy, medicines any
other notified profession
• It should apply its income solely for the objective for
which it was established.
• It should approved by the central govt.
• Income of mutual fund set up by Financial
institution / banks
• income of venture capital fund / venture
capital company
• Income of Trade unions / political parties
• Income of minor child upto Rs. 1500
• dividend from domestic companies.
 Provision in respect of newly established
undertakings in free trade zone etc.
• Conditions:
It must begin manufacturing or
production in free trade zone
Not formed by reconstruction of
business
Not formed by transfer of old
machinery
Sale consideration should be remitted
to india in foreign exchange

Books of account should be audited

Return of income should be submitted

in time
 Contd…
• Amount of deduction
• (Profit of the business of undertaking*export
turn over)/total turn over of business carried
over by undertaking.
• Period of deduction:
• 10 consecutive assessment years beginning with
the AY in which the undertaking begin to
manufacture articles or things or computer
software.
 Amount of deduction
special provision
• If the business is established during 1-4-02 &
31-3-05 than:
• 100 % export profit for 5 years + 50 % 2 yr. +3
year 50 % transfer to sp economic Zone
Reinvestment allowance Reserve
Basic understanding of five heads of income

• Income from house property.

• Register of he house-owner-liable to pay tax
• Income from the land appurtenant is also
taxable under this head.
• The property should not be used as the
business or profession
• Income tax is assessed on the annual value of
the house.
 Profit & gains from the business or
profession
• Business connotes some activity which is
carried on by devoting time, attention &
labour of the either by himself or through
others with an intention to make a profit.
• Profession is any human activity which
requires an intellectual skills e.g doctors &
lawyers.
 Income from other sources
• The last head of the income
• Conditions:
• It should be an income
• It must not an exempted under any other
provision of this act
• It also must not included in the first four heads of
the income
• E.g.: any winnings from lottery, interest on
securities
 Income from salary
• What is “salary”??
• Relation of payer & payee-employer &
employee
• Payment received by the person other than
employer will be treated under income from
business or profession or income from other
sources.
• E.g. paper setting for other university
 Contd….
• Salary & wages
• Salary from more than one sources
• Salary from the former, present or prospective
employer.
• Salary income must be real & not fictitious.
• Foregoing of income
• Voluntary payments
 Basis of income
• Any income due from an employer or from
former employer to an asseessee in PY
whether paid or not.
• Any salary paid or allowed to him in previous
by or on behalf of an employer.
• Any arrears of salary paid or allowed to him in
the PY by or on behalf of an employer, if not
charged to income tax for ant earlier PY.
• Salary on receipt & due basis whichever is earlier
• Place of accrual of salary:
• under sec 9(1)(ii) salary in respect of the services
rendered in India is deemed to accrue or arise in
india even it is paid outside in india
• Pension paid abroad is deemed to accrue in india
if it is paid for the services rendered in india
• Leave salary paid in abroad in respect of leave
earned in India is deemed to accrue or arise in
India
• Different forms of salary:
• Advance salary
• Arrears of salary
• Leave salary
 Leave salary
• What is leave salary?
• Different leaves
• Earning of leaves
• Encashment of leave
• Availability of leaves
 Contd…
Nature of salary Status of Whether it is
employee taxable or not
Leave encashment Govt non govt employees it is chargeable to tax
during the continuity of
employment

At the time of retirement Government employees It is fully exempted from

of the job the tax u/sec 10(10AA)

At the time of retirement non Government It is fully or partly exempt

of the job employees from tax u/sec 10(10AA)
 Non government employees
• In the case of non government employees leave
salary is exempted from tax on the basis of least of
the following:

1 Period of earned leave (in no of months) to the

credit of the employee at the time of his
retirement or leaving the job*average monthly
salary
2 10* average monthly salary

3 3,00,0000( specified by the govt

4 Leave encashment actually received at the time of

retirement
 Contd..
• How to find out leave standing of an employee
at the time of retirement or leaving the job:
• Step (A):find out the duration of the service in
no of years (ignore any fraction of years)
• Step (B): find out the rate of earned leave
entitlement from the service rules-how many
days the leave is credited for each year of
service
 Contd….
• Step (C): find out earned leave actually taken
or encashed (in no of days) during the service
time.
• The computation shall be made as follows:

[Step (A)*step (B) minus step (C)]/30

• Average monthly salary is calculated on the
basis of average salary for the ten months
immediately preceding the month in which
the employee has taken retirement
 e.g.
• X was employed by PQR LTD up to march 15
1988. at the time of leaving he was paid
3,50,000 as leave salary out of which 57,000
was exempt from the tax .thereafter he joined
ABC p ltd.& received 4,14,000 as leave salary
at the time of is retirement on December
31,2008.determine the amount of taxable
leave salary from the following information:
 Contd….
• Salary at the time of retirement………..23,000
• Average salary received during 10 months
• From march 1, 2008 to July 31,2008…….22,600
• From august 1to December 31,2008…….22,900
• Duration of service (A)……..14(3/4) years
• Leave entitlement for every years of service…45 days
• Leaved availed while in service (C)………90 days
 Contd..
• Salary to the partners
• Fees & commission
• Bonus
 Gratuity
• It is the retirement benefit payable at the time
of retirement of the employee
• Exemption in respect of gratuity is available
when it is paid to an employee (i) on his
retirement; or (ii) on his becoming
incapacitated prior to retirement or on
termination of his employment; or (iii) to legal
heir if the employee dies.
 Contd…
Status of an employee Whether gratuity is taxable

Government employees Fully exempt from the tax

u/sec 10(10)(i)
Non government employees It is fully or partly exempt
covered by the payment of from the tax u/sec 10(10)(ii)
gratuity act,1972
Non government employees It is fully or partly exempt
not covered by the payment of from the tax u/sec 10(10)(iii)
gratuity act,1972
 Non government employees covered by the
payment of gratuity act,1972
1. 15 days salary (7 days salary in case of
employees of seasonal
establishment)based on salary last drawn
for each of the eservice (15*length of
services)
2 3,50,000
3 Gratuity of actually received
• Salary in this way means salary last drawn by
the employees & includes DA but does not
includes any bonus, commission HRA overtime
wages or any other allowances
• How to determine the 15 day's salary:
• Maximum no of working are taken into
consideration (monthly salary at the time of
retirement 2500 so, 15 days salary would be
• (2500*15) /26 = 1442.31
 e.g.
• X an employee of PQ LTD receives 78,000 as
gratuity. He is covered by the payment of
gratuity act,1972.he retires on December
12,2008 after rendering service for 38 years &
8 months at the time of retirement his
monthly salary & DA was 2400 & 800 resp. is
the entire amount of gratuity exempt from
tax?
 In case of any other employees
1 3,50,000
2 Half months average salary for each
completed years of service
3 Gratuity actually received
 Contd…
• Average monthly salary is calculated on the
basis of average salary for the ten months
immediately preceding the month in which
the employee has taken retirement.
• Salary in this mean basic salary it includes DA
& also commission payable @ fixed % of
turnover
 Contd….
• When gratuity received by an employee from
more than one employer in the same previous
year ,the aggregate amt of gratuity cannot
exceeds 3,50,000.if the employee has received
gratuity from former employee in any earlier
year & from another employee in later year
than this 3,50,000 reduced by amounts of
gratuity exempt from tax under 10(10)(iii)
 Contd….
• X who is not covered by the payment of gratuity
act 1972,retires on November 20, 2008. from
abc ltd.and receives 186000 as gratuity after
service of 38 years and 10 months. his salary is
8000 p.m upto july 31 2008 and 9000 p.m from
august 1,2008.besides he gets Rs.500 p.m as
D.A. (69% of which is part of salary for
computing retirement benefits) what amount of
gratuity will be exempt from tax?
 Pension
pension Status of employees It is chargeable to
tax or not
Uncommuted Govt/non govt It is chargeable
pension employees to tax
Commuted Government It is fully exempt
pension employees from the tax
Commuted Non government It is fully or
pension employees partially exempt
from tax
 Contd…
• Uncommuted pension: it is periodical
payment of pension for e.g. x gets monthly
pension of 2000 it is taxable as salary under
section 15 in the hands of a government
employee as well as non government.
 Contd….
• Commuted pension: it is a lump sum payment
in lieu of salary.
• For instance after his retirement x, gets 2000
p.m.as monthly payment of pension as per
service rules he gets 25% of his pension
commuted for Rs 60,000 (after commutation
he will get the remaining pension (75%)1500
by the way of monthly pension which x has
received in lieu of 25 % of his monthly pension
 Contd…
• Commuted pension is taxable as under:
Status of employee Gratuity received /not Exemption in respect
received of commuted pension
u/sec10(10A)

Government Gratuity may or may Entire commuted

employees not received pension is exempt
from the tax
Non government Gratuity received 1/3 of the pension
employees which he is normally
entitle to receive
exempt from tax
Non government Gratuity not received 1/2 of the pension
employees which he is normally
entitle to receive
exempt from tax
 Contd..
• X retires from ABC ltd. On June 30,2008. he
gets Rs.20,000 PM up to January 31,2009.with
effect from February 1,2009, he gets 60% of
pension commuted for Rs.10,71,000.does it
make any difference if he also gets gratuity of
40,000 at the time of retirement?
 Retrenchment compensation
• (A): an amount calculated in accordance with
the provision of sec 25F(b) of industrial
dispute act , 1947
• (B):amt notified by the govt( 5,00,000)
• Amt actually received
• Whichever is low is exempt from tax
 Different allowances
• Allowances is generally define as fixed amount
of money given regularly in addition to salary
for the purpose of meeting some particular
recuirenement connected with the service
rendered by employee or as compensation for
unusual conditions of that service
• it is taxable u\s 15 on due or receipt basis
whichever is earlier.
 Contd..
• allowances.docx
 Other allowances & their effects
• The following allowances are exempt u/s 10(14) in following manner.
• The amount of the Allowance
• Or
• The amount utilised for the specific purpose for which allowance is
given,
• (WHICHEVER IS LOWER)
• They are:
• Travelling allowance / Transfer Allowance.
• Conveyance Allowance.
• Daily Allowance.
• Helper Allowance.
• Research Allowance.
• Uniform Allowance.
ENTERTAINMENT ALLOWANCE [SEC. 16 (II)]

• Entertainment allowance is initially included in

taxable as fully taxable. Thereafter, a
deduction is allowed under this section form
gross taxable salary. However, deduction
under Section -16(ii) shall be available to the
government employee only.
 Contd..
• Deduction for Entertainment Allowance
being minimum of the following:
• Actual Entertainment Allowance
• Rs. 5000/-
• 20% of Basic Salary
• Salary exclude any allowances & benefits or
other benefits.
 Contd..
• Note:
• Amount actually expended towards
entertainment ( out of the amount received as
allowances )is not taxable
• No deduction is available under this section to
a non government employee.
 HOUSE RENT ALLOWANCE (Section 10(13A)
• An allowance to meet the expenses in connection
with the rent of the house
• Exempted House Rent Allowance if the house is
situated in Mumbai, Delhi, Chennai and Kolkata
• Minimum of the 3 conditions is exempted value of house rent
allowance
Sr. Particulars Rs Rs
No.
1 Actual HRA Received

2 Actual Rent Paid

(-) 10% of Salary
3 50% of Salary
 Contd..
• Exempted House Rent Allowance if the house
is situated in other cities.
Sr. Particulars Rs Rs
No.
1 Actual HRA Received
2 Actual Rent Paid
(-) 10% of Salary
3 40% of Salary
• Salary for the Purpose of HRA
Sr. Particulars Rs
No.
1 Basic Salary
+ DA (considered for
Retirement Benefits)
+ Commission (based on fixed
% of turnover)
Total Salary
 Contd..
• Exemption is not available if employee lives in his
own house, or in a house for which he does not pay
any rent.
• For criteria of 50% or 40% of salary as deduction,
place of employment is not significant but place
where the house is situated is important.
• Deduction from HRA depends on salary of the
employee, Amount of HRA, Place of residence (not
place of employment), rent paid by the employee.
 Example
• X who is posted in Delhi but reside @ Noida
gets Rs 60,000 p.a. as basic salary he gets Rs
9,000 p.a. as HRA ,though he paid 12,000 p.a.
as rent during the PY 2008-09 he received Rs.
5000 as advance salary of April 2009
 Perquisites
• Any casual benefit that is attached to the to an
office or positions in addition to salary or
wages
• It may be provided in cash or kind
• It is taxable under the head salary when
• Allowed by employer to his employee
• Allowed during continuity of service
• Provided for the personal advantage of the employee
• Derived in terms of keeping in mind the authority of
employees
 Contd..
• Perquisite subject to fringe benefit tax &
taxable to the employer not to employee.
• Perquisite taxable in the hands of employee
whether or not employer is liable to pay fringe
benefit tax.
• Perquisite taxable in the hand of employee
when employer is not liable to pay tax
 Perquisite taxable in the hands of employee whether or not employer is liable to pay
fringe benefit tax.

• Valuation of rent free accommodation:

• Valuation of unfurnished accommodation
• Valuation of furnished accommodation

– Government employees
– Non government employees

• Government employees:
• If the accommodation is provided by the central or state
govt.
 Contd..
• Employees of local authority or foreign govt
are not covered by this group & treated as
private employees
• For govt employees the license fees decided
by or determined under the govt rules is the
taxable value.
 Valuation of unfurnished accommodation

• Government employees (previous slide)

• Provided to other employees:
• Value of Furnished House in case Accommodation is
taken on Lease or Rental Basis
Sr. Particulars Rs Rs
No.
1 Actual Rent paid or
15% of Salary
(whichever is Less)
 Contd..
• Where such accommodation is owned by
employer:
• Value of unfurnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is 10 lakhs or less

Sr. Particulars Rs Rs
No.
1 7.5% of Salary
 Contd...
• Value of Furnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is more than 10 lakhs but less than 25 Lakhs
Sr. No. Particulars Rs Rs
1 10% of Salary
• Value of Furnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is 25 lakhs or more
Sr. No. Particulars Rs Rs

1 15% of Salary
 Contd..
• Salary:

Sr. No. Particulars Rs

1 Basic Salary
+ DA (considered for
Retirement Benefits)
+ All taxable allowances
+ Bonus
+ Commission
Total Salary

• Employee's contribution to PF, gratuity, perquisites not taken into consideration

• X is purchase manager of private sector
company, gets following benefits:
• basic salary: 8,60,000, bonus: 6000, project allowances 5000,
commission on purchase made bye him: 16,500, DA(not for
retirement benefit) 3,000, education allowances: (including hostel)
for two children of X. besides the employer provides rent free
accommodation owned by him in Bombay for residential purpose:
the house is allotted on sept 15,2008 but occupied by him from
1.october 2008. find out the taxable value.
 Valuation for furnished
accommodation
• Value of Furnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is 10 lakhs or less

Sr. Particulars Rs Rs
No.
1 7.5% of Salary
+ 10% of the original Cost of
Furniture
+ Hire Charges Paid in
respect of Furniture
- Token Taken From the
Employees
 Contd..
• Value of Furnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is more than 10 lakhs but less than 25 Lakhs
Sr. Particulars Rs Rs
No.
1 10% of Salary
+ 10% of the original Cost
of Furniture
+ Hire Charges Paid in
respect of Furniture
- Token Taken From the
Employees
 Contd..
• Value of Furnished House in case Accommodation is owned
by the Employer and the house is situated in city where the
population is 25 lakhs or more

Sr. Particulars Rs Rs
No.
1 15% of Salary
+ 10% of the original Cost
of Furniture
+ Hire Charges Paid in
respect of Furniture
- Token Taken From the
Employees
 Contd..
• Value of Furnished House in case Accommodation is taken on
Lease or Rental Basis
Sr. Particulars Rs Rs
No.
1 Actual Rent paid or 15%
of Salary (whichever is
Less)
+ 10% of the original Cost of
Furniture
+ Hire Charges Paid in
respect of Furniture
- Token Taken From the
Employees
 Contd..
• Shri malaya Das Gupta is the general manager of the
company @ kanpur
• Basic salary: 30,000 pm up to 30-09-2008
40,000 pm from 1-10-2008
• DA: 37.5% of basic salary (50% of which is for PF)
• 9000 pm which increased 12000 pm from 1-1-2009
• Bonus: 1/5th of basic salary
• Perquisite: the house was actually used by employee for
residential purpose from 1-4-2008 to 30-11-2008.the annul
fair rent of this house owned is 1,80,000 the company
provided furniture for that it pays rent of 36,000 pa
 Contd..
• Free Domestic Servants: Actual expenditure of the
employer is the salary paid by the employer – any
token amount paid by the employee remaining is
taxable
• Gas, Electricity or water supplied: the taxable amt
is the manufacturing cost provided by the
employer if it is provided from the own resources
& if purchased from the outside than amount paid
to outside agency will be taxable any token taken
from employee will be reduced from that amount.
 Contd..
• Free Education Facility to the Family Members of
the Employee:
• School fees of the children of employee directly paid
to school will be taxable in all cases
• Reasonable cost of education in a similar institute in
or near the locality is taxable (up to Rs. 1,000 per
month per child is not taxable if education facility is
provided to the children of an employee in an
educational institution owned/maintained by the
employer).
 Leave travel concession in India
Different situation
Where journey by Air
Where journey by Rail
Where place of origin of journey &
destination connected by rail &
journey is performed by any other
mode of transport
Amount of exemption ( exemption is
available only in respect of fare for
going anywhere in india along with
family twice in block of four years)
Amount of economic class fare of
national carrier by the shortest route
or amount spent whichever is less
Amount of air condition first class fare
of national carrier by the shortest
route or amount spent whichever is
less
Amount of air condition first class fare
of national carrier by the shortest
route or amount spent whichever is
less
 Contd..
• Carry over concession: if leave travel
concession is not availed by the employee in
the four year block for one occasion or for two
occasion for that the exemption can be
available for in the next year for the first
calendar year but in respect of only one
journey
• Fare of more than 2 children: exemption not
available to more than 2 children in case of
children born after October 1, 1998
• Exemption will be admissible to all surviving
children born before October 1, 1998
Employee’s obligation met by employer

• Amount paid by an employer in respect of any

obligation which otherwise would have been
paid by employee
• E.g. servant facility
Amount paid by employer to effect an assurance
of life of employee
• Amount contributed to RPF
• Approved superannuation fund
• Group of insurance schemes
Valuation of perquisite in respect of interest free
loan at concessional rate
• If the loan is given by employer to his employee
or any member of family than it is taxable on
the following bases:
• Step 1:find out the maximum outstanding
monthly balance ( aggregated outstanding
balance for each loan on the last day of each
month)
• find out the rate interest charged for the loan
by SBI
• Step 3: find out the interest for each month of
PY on outstanding amt
• Step 4: from that calculated interest reduce
amt f interest paid by employee
• Remaining amt s taxable perquisite
 Use of movable asset
Any other asset
Mode of Computer Owned by Taken on hire
valuation s/ laptops employers
Step 1: find out Nil 10% PA of actual Amt of rent paid or
cost to employer cost payable
Step 2: less: Nil Recovery from Recovery from
amount employee employee
recovered from
employee
Taxable value of Nil Balance amt Balance amt
the perquisite