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Fringe Benefits

 

    1. What are fringe benefits?
    2. Are fringe benefits taxable?
    3. Types and valuation of fringe benefits subject to PAYE?
    4. Value of fringe benefits effective as from 1st January 2014

    1. What are fringe benefits?

       

      A ' fringe benefit ' is any advantage in money’s worth provided to an employee in respect of or in relation to his employment.

       

    2. Are fringe benefits taxable?

       

      Any fringe benefit an employer provides to his employee is taxable and must be included in the employee’s pay. However a payment by an employer:

       

      1. to provide a pension or retiring allowance for the employee or his dependents;

         

      2. to a scheme approved by the Director-General to provide against medical expenses for the employee or his dependents; does not constitute a taxable benefit

         

       

    3. Types and valuation of fringe benefits subject to PAYE?

       

      Fringe benefits treated as emoluments for PAYE purposes include housing benefit, car benefit, tax benefit, full board and lodging to expatriates or locals, personal expenses of the employee which are borne by the employer and any other advantage in money’s worth.

       

    4. Value of fringe benefits effective as from 1st January 2014
   

Monthly Taxable Benefits

(Rs)

1.

Car Benefit -

Cylinder Capacity -

Up to 1600cc

1601 to 2000cc 

above 2000cc

9,500

10,750

12,000

2.

Housing benefits –

 

Where property is –

  1. owned by the employer 

     

  2. rented by the employer 

 

 

 

Unfurnished - 10 per cent of employee’s total emoluments.

Furnished – 15 per cent of employee’s total emoluments.

 

Actual Rent Paid

3.

Accommodation benefit provided by hotels –

a. Full board and lodging

(i) Single

(ii) Married

 

b. Accommodation -

(i) For managing and supervisory staff

(ii) Other staff

 

 

11,500

15,700

 

 

4,400
2,200

 

4. Interest free loans or loans at reduced rates

Difference between the amount of interest for the month, calculated at 2 per cent per annum above the repo rate, prevailing at the end of that month, and the amount of interest paid by the employee in that month.

 

5.

Tips received by an employee from a pool managed by the employer

 

Actual amount received in the month

6.

Repayment or write-off of employees’ debt by employer

 

Amount of debt repaid or written off in the month

7.

Domestic and private expenses borne by employer including utilities, wages of housemaids, school fees of children, club membership fee and any other domestic and private expenses

 

Actual amount paid for the month

8.

Tax paid by the employer

 

 

 

Tax benefit is arrived at by dividing the tax payable on the actual emoluments by a factor which varies according to the marginal tax rate applicable

 

Note:-

  1. For the purposes of items 1 and 2, any contribution made by an employee to his employer shall be deducted from the car benefit or housing benefit, as the case may be.
  2. For the purposes of item 2, total emoluments shall exclude the yearly bonus and housing benefit.

 

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