CBDT published perquisite valuation rules.

The perquisite valuation rules finally arrived on December 21 after a long wait. The fringe benefit tax (FBT) was strongly opposed by India Inc, but there is no doubt that it was beneficial to the employees — they did not have to directly bear the tax on many perquisites. The repeal of FBT meant uncertainity on taxation of perks. Thankfully, there are few changes to the valuation rules when compared to the rules that existed prior to the introduction of FBT. Rule 2BB, which deals with taxability of allowances, remains unchanged. If we take an overall view on employee benefits and allowances, a few items merit attention and this article will discuss them with the hope that they will be taken note of. The taxable values for provision of an automobile including the cost of its running and maintenance, and driver is nil if the car is used purely for official purpose. However, if the employer allows mixed use, the rule provides for deemed values towards personal use. These values have raised by 50% (there is also an apparent typo in one clause that may be rectified soon). Given that the earlier values were set many years ago, an enhancement of the limit accounting for the increase in fuel prices is justified. However, price increase is not limited to fuel only, prices have increased on many other household expenditure as well such as school fees, food, local transportation etc for which the exemption limits have not been raised. The exemption for transport allowance under Rule 2BB remains unchanged at Rs 800 per month although the limits for this allowance was raised by the Sixth Pay Commission (SPC) or government employees. A 50% increase is merited here as well. Education allowance for children continues to be a measly Rs 100 per month while the entitlement under the SPC is a princely Rs 1,000 per month with an additional Rs 3,000 per month as hostel subsidy. With education being a key concern, a higher limits would be welcome. Now consider the case of meals provided by an employer during working hours. This is a benefit that is statutorily provided to factory workers and generally provided in many other establishments as well. There are enough studies that show the positive co-relation between wholesome meals and worker productivity and, during the FBT regime, the entire expenses were exempted. Source : Economic Times.