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Introducing the “In Favour Of” filter in Case Laws.
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of <h1>Income Tax Act Limits Allowances for Employee Benefits u/ss 40(c)(iii) and 40(a)(v); Clarifies Perquisites.</h1> The circular addresses the limitation on allowances for benefits, amenities, or perquisites under sections 40(c)(iii) and 40(a)(v) of the Income Tax Act, applicable from February 29, 1964. It specifies that reimbursements and benefits such as medical expenses, utilities, and domestic services should be considered perquisites, limited to one-fifth of an employee's salary for tax deduction purposes. Bonuses and commissions are treated as salary if contractually obligated, otherwise as perquisites. The circular also clarifies that only voluntary and gratuitous payments are considered perquisites, not enforceable salary components. Previous related circulars have been withdrawn.
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