Perquisites received by employees are taxed under the Income Tax Act, 1961. These benefits, whether provided directly or deemed to be provided, are valued in monetary terms and added to the employee's income under the Income Head "Salaries."
As per the Finance Act, 2005, the government applies a tax rate of 30% on the value of these fringe benefits. Employers, who provide these perks, are responsible for paying this tax. This process ensures that employees' total compensation is subject to taxation, with employers handling the tax payment.
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