Value of perquisites

T. Banusekar

WHERE the car is owned by the employee and the expenses on running and maintenance of the car -- for both the private and official purposes -- are met by the employer, what will be treated as the value of the perquisite?

Can an assessee claim the deduction both under Section 80DD and under Section 80DDB simultaneously, if the conditions prescribed by the respective Sections are satisfied by the assessee?

M. K. Agarwal

Reply

If the motor car is owned or hired by the employee, but the expenses on maintenance are met by the employer, the value of perquisite shall be as follows:

*If the cubic capacity of the engine does not exceed 1.60 litres, the actual expenditure incurred by the employer as reduced by Rs 1,200 per month.

*If the cubic capacity of the engine exceeds 1.60 litres, the actual expenditure incurred by the employer as reduced by Rs 1,600 per month.

*If a chauffeur is provided by the employer, the value of perquisite computed in the manner stated above shall be increased by a sum of Rs 600 per month.

If the employer/employee claims that the actual expenses of running and maintenance of the motor car owned by the employee for official purposes is more than the amount stated as deductible, he may claim that higher amount as the deduction, provided the following conditions are fulfilled:

*The employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage and the amount of expenditure incurred thereon.

*The employee gives a certificate that the expenditure was incurred wholly and exclusively for official purposes.

*The supervising authority of the employee, wherever applicable, gives a certificate that the expenditure was incurred wholly and exclusively for carrying out official duties.

Section 80DD provides for a deduction, where the assessee is a resident individual or a HUF in respect of expenditure incurred on medical treatment (including nursing), training and rehabilitation of a handicapped dependent, relative or in the case of a HUF, any member of the family, or where any sum has been paid is deposited for the benefit of such persons, under a scheme framed in this behalf by the LIC or any other insurer or UTI, and where such scheme is approved by the Board.

Section 80DDB provides for a deduction, where the assessee is a resident individual or HUF and where such assessee has incurred any expenditure for the medical treatment of any disease or ailment specified in rule 11DD either on himself, or on a dependent relative and in the case of a HUF, on any member of the family.

The said deductions are independent of each other and can be claimed simultaneously by an assessee, subject to satisfying the conditions prescribed in the respective Sections.

Query

I have taken a housing loan and the interest thereon, I claim as a deduction under Section 24 in computing income from `house property'. I also claim rebate under Section 88 in respect of the principal repayment of this housing loan. I now propose to

avail another housing loan on the mortgage of another property I own.

Can I claim as a deduction, the interest and also claim rebate under Section 88 on the principal repayment of this loan? If yes, can I claim the interest on the fresh housing loan as a deduction in computing the income from my first house property during the

years in which the second house is under construction? Note that the first house property is self-occupied.

Pradeep

Reply

Interest can be claimed as a deduction in computing income from house property subject to the limits given in Table 1.

If interest is paid during the construction period, the same can be claimed in five equal instalments, commencing from the year in which the construction is complete, subject to the limits stated in Table 1. It is not possible to claim the interest payable during the pre-construction period, as a deduction from the

income of another property until such time as the construction of the property is completed.

The interest payable up to the year preceding the year in which the construction is completed, can be claimed as a deduction only

commencing from the year in which the construction is completed.

Rebate can be claimed under Section 88 in respect of principal repayment of an amount borrowed from specified institutions. The amount on which the rebate can be claimed cannot exceed a sum of Rs 20,000.

Interest payment and principal repayment will qualify for deduction/rebate even in respect of more than one property.

Query

My wife was suffering from cancer and underwent treatment for the same. The expenditure on the medical treatment incurred by me was

Rs 70,000 out of which Rs 35,000 was reimbursed by my employer. Will this amount reimbursed be treated as a perquisite in my

hands?

Telu Ram

Reply

If an employee incurs any medical expenditure either for himself or on any family member, the same will not be treated as a perquisite when it is paid or reimbursed by the employer in the following cases:

*Expenditure incurred in a hospital owned and maintained by the

employer;

*Expenditure incurred in a Government hospital or public hospital or in a private hospital which is approved by the Chief Commissioner of income-tax;

*Medical expenditure incurred in connection with treatment outside India to the extent permitted by the Reserve Bank of India in respect of the patient and one attendant;

*Travel expenditure incurred on medical treatment outside India, provided the gross total income of the employee does not

exceed Rs 2 lakh;

*Any other medical expenditure to the extent of Rs 15,000 per annum.

In the reader's case, without particulars, it would not be possible to conclude whether the reimbursement by the employer would be treated as a perquisite or not. However, it can be said that if the employer has reimbursed the expenditure incurred in the employer's own hospital/Government hospital/public hospital/private hospital approved by the Chief Commissioner of Income-Tax, it will not be treated as a perquisite.

Business Line invites queries on personal taxation issues to this column. They will be answered in the forthcoming issues of Business Line. Queries may be addressed to Tax Talk, Business Line, Kasturi Buildings, 859, Anna Salai, Chennai 600002, or by e-mail to vaidy@thehindu.co.in. (Readers are requested to mention `Tax Talk' in the subject line of their e-mails.)