Government to tax employee perquisites effective 1 April 2009

Employees may have to pay taxes on perquisites they get including housing and conveyance, according to official sources. The new levy may take effect with retrospective effect from 1st April this year, the sources say.

The government may soon bring out a notification on the computation of the value of the housing and conveyance allowances to determine the liability under the tax regime. 

The Fringe Benefit Tax (FBT) under which perquisites at the hands of employers were taxed was done away with in the budget 2009-10 and now with the levy gone, the government may tax the salaried class for the perks they enjoy for conveyance and housing along with other benefits.

Analysts say that under the FBT, the tax burden of perquisites that was on the employer, would now be on the employees. They add that taxes for about nine months would have to be paid by the employees if the rules were to come into effect from 1April, 2009

The new tax plan would also cover other perks like traveling, free-food and non-alcoholic beverages provided by the employer, any gift or vouchers received by employees on ceremonial occasions, reimbursements for membership of a club, tours, and allowances would also come under the purview of this new tax plan. Benefits under which any member of the family of an employee receives free education would also be taxed.

Analysts say the government has largely retained the old perquisite valuation rules that were in force prior to the FBT regime. It has only marginally tinkered in the case of cars and food vouchers where value of meal has been fixed at Rs50 apiece.