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BANGALORE, March 6

THE Karnataka High Court has stayed the provisions of the Finance Act 2001, which allows for taxation of perquisites to employees.

The stay order was issued in response to a petition filed by the Professional Workers Trade Union Centre. The petition challenged the constitutional validity of Section 17 (2) (vi) as inserted to the Income-Tax Act 1961 under the Finance Act 2001, which takes effect in April this year.

The petitioner stated that Section 17 of the I-T Act has defined different heads of income which includes salary, perquisites and profits, and that this "section has not left to discretion of the executive to include any other kinds of income under the three heads.''

The petitioner took the stand that taxation of these perquisites could be done only at the discretion of Parliament.

The PWTUC represents 300 affiliated organisations, including public sector undertakings such as the Steel Authority of India Limited, Hindustan Photo Films Limited and Jessops. In addition, the National Confederation of Insurance Officers Association is also affiliated to the PWTUC.

The amendment had authorised the Income-Tax Department to tax perquisites, which included concessional housing, concessional housing loans, concessional educational facilities and vehicle loans.

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