Why the section was introduced:
Ministry of finance noticed the Revenue Leakage in providing Benefits/perquisites.
Threshold Limit: Rs 20,000[i.e., deduct only when exceeds 20000]
Who has to deduct(deductor):
- Other than Individual/HUF
- Individual/HUF whose sales/gross receipts/TO > 1cr (Business) or >50 Lakhs (Profession) in the immediately preceding financial year.
For whom to deduct(deductee):
Who is getting the benefit/perquisite (applicable only for Resident Assesse)
When to deduct: Before releasing benefit/perquisite
- Benefit/Perquisite can be in the form of cash or kind or part thereof.
- Sec. is applicable irrespective of whether the benefit/perquisite is contractual/gratuitous
- Waiver of Loan is not benefit or perquisite
- Purchase of shares as an investment with lock in period of holding, for consideration less than Market value – Not a benefit/perquisite
- Vehicle provided to director of a company for free use-Perquisite value to be determined as per Rule 3 [talks about determination of value of perquisites given to employee under the head salaries] even though he/she is not an employee of the company.
- With the introduction of this section, we can say that taxability of Benefit/Perquisite is not only restricted to employees but also taxable in the hands of Business/Profession too.