Accomodation - seggragation

[CHITRA HARIHARAN]

As perSec 192(1A) of the Income Tax Act, 1961, the employer at his option can pay average tax(read with sec10(10cc) while calcualting the non monetary taxable perquiste in the hands of the employee. The question arises whether the employer can seggragate while calculating the average tax to be paid by them between(1) self leased accomadation( house taken on lease from the employee itself) and (2)third party lease(house taken on lease from a any other person other than the employee) & house owned by the employee. In this case, the employer has given the benefit of TAX PAYMENT only the (2) mentioned above and not for the employees covered under(1) above. Whether the treatment by the employer is correct according to rule 3 which deals with calculation of perquistes?

[Surender Gupta]

I think you can not calculate TDS liability separately under different provisions. Total TDS liability to be calculated applying rule 3 irrespective of the fact that the property is self leased accommodation or third party lease.

AI Summary

Average tax on non monetary perquisites must be computed on aggregated TDS liability under the perquisite calculation rule, not segregated. Employers may opt to discharge average tax on non monetary employment perquisites. The TDS liability must be computed on an aggregated basis under the rule governing perquisite valuation and TDS calculation; employers may not segregate that computation between self leased accommodation and third party or employee owned accommodation or selectively apply employer tax payment to one category.