INCOME TAX
The Finance Act, 2007 had inserted a deeming provision to
define concession in the matter of rent for the purpose of determining the
perquisite value. It has also reduced the rate of valuation of perquisite in
the nature of concessional rent accommodation and leased accommodation with
retrospective effect from 1st day of April, 2006, that is with effect from
assessment year 2006-2007. This has necessitated similar reduction of rates in
case of both rent-free and concessional rent accommodations and leased
accommodation in Table I of rule 3 with retrospective effect from 1st day of
April, 2006, that is in relation to assessment year 2006-2007 and subsequent
years.
Further, the Finance Act, 2005 had inserted a new
Chapter XII-H in the Act, relating to levy of Fringe Benefit Tax (FBT) on the
employer with effect from 1st April 2006, i.e. applicable for assessment year
2006-07 and subsequent years. Accordingly, rule 3 was amended vide notification
number S.O. 265(E) dated the 28th February, 2005, to avoid double taxation on
certain items. Since, Chapter XII-H relating to FBT is not applicable to the
employer being an individual or a Hindu undivided family or any fund or trust
or institution eligible for exemption under clause (23C) of section 10 or
registered under section 12AA, rule 3 is required to be amended so as to
include valuation of perquisite in case of benefits provided by such employers
to its employees. Accordingly, sub-rules 2, 6, 7 (ii), (iii), (iv), (v) and
(vi) have been inserted to provide for such valuation. Sub-rule 7(ix) has been
inserted to provide for valuation of any other benefit or amenity, etc., in
residual cases relating to any employer. These sub-rules will take effect from
the 1st April, 2008 and will, accordingly, apply in relation to the assessment
year 2008-2009 and subsequent years.
The Income Tax Rules have been amended accordingly
and notified by the CBDT on 7th November 2007 vide SO No.1896(E) (Notification
No.271 /2007/F.No.142/15/2007-TPL).
BSC/RP/GN-470/07