A person who has more than 20per cent voting power in the company is said to have substantial interest in the employer company. An employee who is drawing more than Rs.24000 per annum in cash i.e. any employee whose monetary remuneration other than perquisites is more than Rs.24000 will be treated as specified employee. Budget 2001 proposes to increase this limit from Rs.24000 to Rs.50000. This amendment may not have much significance since most employees who get perquisites and other employment benefits in any case draw more than Rs.50000 per annum. In the hands of specified employees, all perquisites, whether by way of free housing or concessional housing or whether the primary liability of payment is that of employee or employer and any other perquisites other than tax free perquisites above will be taxable income.
Perquisites are taxable in the hands of the employee.
However since they are paid in kind, notional monetary the value of the perquisites must be determined in order to get the taxable amount of perquisites. The CDBT will now make rules for the valuation of taxable perks and amenities. When a gardener or sweeper or watchman is provided by the employer to the employee for his residence and the salary is borne by the employer, an amount of Rs120 per month per servant is currently the taxable value. The new rule may provide to tax the differential interest as salary income. This may affect a large number of employees.