Interest on employee loans: government-prescribed rate and monthly outstanding calculation determine taxable perquisite valuation under income tax rules.

The Government fixed simple interest at 10% per annum for employee loans under the newly inserted sub-clause and, via rule 3A of the Income-tax Rules, 1962, mandated that interest be calculated at the prescribed rate on loan amounts outstanding as on the last date of each month of the previous year, after deducting in-month repayments of principal or interest from the opening or advanced amounts, with the result used for perquisite valuation and tax deduction at source from salaries.

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