The value of perquisite can get benefit along with to an office or position in
addition to the salary. It refers to something that benefits a person by going into
his own pocket. Grants can be provided in cash or in kind. However, grants are
taxable under the heading “salary” if they are
A. An employer has given permission to his employee;
B. Allowed during job continuity;
C. Dependent on direct service;
D. The nature of the personal benefits of the resulting employee; And
E. Obtained by the authority of the employer.
It is not necessary that only repetition and the regular receipt is a prerequisite. The below-given intimation should also be considered:
Perquisites are included in the salary income if they receive an employee from their employer (possibly former, current or potential). Grants received from a person other than the employer are taxable under the heading "Profits and Profits of Business or Profession" or "Income from Other Sources".
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An advantage or benefit will only be taxable as a condition if it has a legal source. Since an employee receiving an unauthorized benefit without the authority of his employer would create a legal obligation to recover such benefit, it would not be “favourable” taxable under the law. Another hand, if benefits are provided unilaterally without the help of an agreement between the parties, the employee may be taxed on perquisites. It is not necessary that the benefit should have been available under an enforceable right.
Under the Act, the term "grant" is defined by section 17 (2) to include the following items:
The price of rent-free accommodation paid to the assessor by his employer [sec. 17 (2) (i)];
The price of a discount for rent in the case of accommodation provided to a person designated by his employer [sec. 17 (2) (ii)];
The value of any facility or benefit offered in any of the following cases, free of charge or at a discounted rate:
An employee by the company who is its director;
To an employee by the company, a person who has a vested interest in the company;
An employer (including a company) is an employee on whom the provisions of (i) and (ii) are not applicable and whose salary is not paid except for the value of all benefits or privileges under income entitled "salary". Financial benefits, money exceeding 50,000 [sec 17 (2) (iii)];
Any payment made by the employer in the event of any obligation to be paid by the appraiser for such payment [sec. 17 (2) (iv)];
Any money paid by the employer, directly or recognized provident fund or any other fund other than the approved supervisory fund or deposit-linked insurance fund, for a guarantee or annual contract in the life of the appraiser [sec 17 (2) (v)];
The value of the prescribed securities or sweat equity shares is directly or indirectly allocated or transferred by the employer, or by the former employer, at a fixed or discounted rate [sec. 17 (2) (vi)];
The amount of any contribution to the retirement fund approved by the employer in the case of the assessor, as long as it is Rs. 1,50,000 [sec 17 (2) (vii)]; And
The value of any other benefit or benefit that may be determined [sec. 17 (2) (viii)].
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