Clause 17 Perquisite.
Income Tax Bill, 2025
1. Introduction
The Income Tax Bill, 2025 proposes significant changes to the definition and treatment of perquisites compared to the existing provisions u/s 17(2) of the Income Tax Act, 1961. The new provisions aim to streamline and modernize the taxation of perquisites while maintaining certain key exemptions.
2. Key Structural Changes
2.1 Organization and Format
- The new Bill presents a more organized structure with clear subsections and better categorization of perquisites
- The language has been simplified and modernized
- Explanations have been integrated into the main provisions rather than being separate
3. Substantive Changes
3.1 Accommodation-Related Perquisites
Key Changes:
- The Bill consolidates provisions related to rent-free and concessional accommodation
- Removes detailed explanations about computation methods, leaving them to be prescribed
- Eliminates specific provisions about furnished accommodation and hotel accommodation
3.2 Benefits and Amenities
Notable Modifications:
- Streamlines the provisions regarding benefits provided to directors and employees
- Removes the monetary threshold of Rs. 50,000 present in the old Act
- Introduces a prescribed amount approach for determining applicable cases
3.3 Contribution Limits
Standardization:
- Introduces a uniform limit of Rs. 7.5 lakhs for aggregate employer contributions to various funds
- Combines provisions for different types of funds under a single clause
- Includes new provisions for annual accretion calculations
4. Exemptions and Exclusions
4.1 Medical Benefits
Retained Exemptions:
- Treatment in employer-maintained hospitals
- Treatment in government/approved hospitals
- Medical insurance premium payments
New Features:
- Removes the previous monetary ceiling on medical reimbursements
- Streamlines the conditions for overseas medical treatment
5. Practical Implications
5.1 For Employers
- Simplified compliance requirements
- Clearer guidelines for perquisite valuation
- Uniform treatment of various benefits
5.2 For Employees
- More transparent perquisite taxation structure
- Consolidated limits for employer contributions
- Enhanced clarity on exemptions
6. Conclusion
The proposed changes represent a significant modernization of perquisite taxation, focusing on:
- Simplification of provisions
- Standardization of limits
- Better clarity in implementation
- Reduced complexity in compliance
Full Text:
Clause 17 Perquisite.
Dated: 27-2-2025
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