TAX PLANNING- INDIVIDUALS PERSPECTIVE- PART 2

1.    Proviso to Sec 17 (2) Medical Facilities

• Medical facility provided to employee by employer or family member in a hospital maintained by employer.
• Value of medical facility provided by employer to employee by virtue of employment in any government hospitals of govt approved hospitals.
• Value of medical treatment given in any hospitals approved by commissioner of IT for any specified dieses.
• Reimbursement of medical bills up to Rs.15000 per annum.
• Medical insurance premium paid by employer on health of employee and family members is not a taxable perquisite. Insurance company must be approved by IRDA.

2.    RFA or Accommodation at concessional rate  Sec 17 (2 i) & (2 ii)

• In case of non govt employees, accommodation be classified into two:

Accommodation owned by employer: perquisite is based on the population of the city.

Population less than 10 Lakhs     -           7.5% of Salary

>10 lakhs to < 25 Lakhs                  -           10% of Salary

More than 25 Lakhs                                    -          15% of Salary

Salary mean basic + DA in terms of employment + Bonus + Commission + all other taxable portion of allowance.

• Accommodation hired by the employer, perquisite will be 15% of salary or hire charges paid by employer whichever is lower.

This two is based on the assumption of unfurnished accommodation.

• If the accommodation is furnished, add perquisite in respect of furniture if any.
• The finishing provided by employer, can bi divided into two

1)    Furniture owned by employer – perquisite will be 10% of original Cost.

2)    Furniture hired by employer – perquisite will be actual charges paid by employer.

• If any amount is collected from employee, the amount is deducted and balance will be perquisite.
• Accommodation provided to employee in hotel – perquisite will be 24% of salary or hotel bills met by employer whichever is lower.

However no perquisite if accommodation is given in hotel for a period not exceeding 15 days on account of transfer of employees from one place to another.

More than 1 RFA

• On account of transfer of employee from one place to another, employee is enjoying rent free accommodation of new place of posting and at the same time retained the old RFA, perquisite will be valued as

·         Up to 1^st 90 days of such dual accommodation: - value both the perquisite but only lower one will be taxable.

·         From 91 day onwards: - perquisite will be valued in respect of both the accommodation.

·         Dual accommodation should be on account of transfer of employee.

Usage of movable Assets

• Perquisite will be 10% of original cost if asset is owned by the employer.
• If it is hired by the employer then it is actual hire charges.
• But there is no perquisite in respect of Laptop & Computers.
• Motor Car provided by the employer cannot be included for this purpose.

3.    Transfer of movable assets

·         Any movable asset owned by employer transferred to employee, it is taxable

·         Motor Car- Dep WDV 20%

·         Computers and electronic gadgets- Dep WDV 50%

·          Other assets- SLM 10%

·         Depreciation is applied for each completed years of service.

·         Difference between WDV and amount paid by employee to employer on transfer of asset is taxable.

4.    Section 10(32)- Minor child income

·         Income of minor child received is exempt to the limit of Rs 1500 or actual income so clubbed whichever is lower.

5.    Section 10(35)- Income from mutual fund

• Income received in respect of units of a mutual fund specified u/s 10(23D)

6.    Section 10(34)- Dividends

·         Any income by way of dividends in respect of which DDT has been paid.

7.    Section 10(38)- Long term capital gains from Equity share/ units

·         LTCG arising on transfer of a listed security being listed equity share of a company or equity oriented mutual fund is fully exempt if STT has been paid and transfer takes place through recognized stock exchange.