Perquisites Taxation

[Tax Tycoon]

I received 6000 amazon gift card as reward which was included u/s 17(2)(viii) and tax was deducted on entire 6000. I informed payroll team to make 5000 as nil and include remaining as taxable income. They denied to do that also refused to change in Form 16. During ITR I will make 5000 as nil it would trigger an alert right?

[DR.MARIAPPAN GOVINDARAJAN]

While filing return you may indicate the taxable income.  

[Tax Tycoon]

So I can reduce taxable income. Gift card value 6000. E.g if taxable income is 516000 I will change it as 511001 (4999 excluded as per Rule 3(7)(iv)).  

[DR.MARIAPPAN GOVINDARAJAN]

Ok. You have to show the entire income and  to indicate the gift amount as exempted income in the return.

[Tax Tycoon]

Where I need to mention 17(2)(viii) during ITR I mean do we have such provision?

[DR.MARIAPPAN GOVINDARAJAN]

Since in Form 16 it was mentioned as Rs.6000/- you cannot make it as Rs.5000/-.  TDS was recovered for the entire Rs. 6000/-  As per Rule 3(7)(iv) the exemption is up to Rs.5000/-. If the gift exceeds Rs.5000/- the entire amount is liable for taxation and your employer rightly deducted tax at source for the entire amount.  It is my view.

[DR.MARIAPPAN GOVINDARAJAN]

Please ignore my second view. 

[Tax Tycoon]

But beneficial interpretation must be liberal 4999 must be nil anything above must be taxable.

Many sources confirmed the same. I am unable to include screenshots.

AI Summary

Perquisites taxation: employer inclusion of gift vouchers can render entire voucher taxable when exemption threshold is exceeded. Perquisites taxation arising from a gift voucher shown as fully taxable in payroll and Form 16, with employer refusing to treat part as exempt; filer must declare full amount in return but may indicate an exempt component, while practitioners note that if the voucher value exceeds the statutory exemption ceiling the employer may rightly deduct tax on the entire amount.