Jun 182015

Valuation of perquisite in the assessment of the employees for enjoyment of moveable assets of employer

We all know that perquisites are the casual emolument or benefit attached to an office or position in addition to salary or wages. Generally employers equip their employees with assets which help them in efficient working – like laptop, computer, car, other electronic items etc. Income tax act assumes these enjoyments as income of employees and taxed under the head – “Income under the head salary”. Here an attempt is made to understand the extent of taxation involved when employee uses these assets.

Perquisite in respect of use of movable assets-

Mode of valuation Perquisite in respect of use of movable assets
Computer/laptop Any other assets
Owned by the employer Taken on hire by employer
Step 1- Find out cost to the employer


Step 2- Less Amount recovered from the employee


Taxable value of the perquisite (Step 1- Step 2)









10% per annum of actual cost


Recovery from the employee



Balancing amount (if it is positive)

Amount of rent paid or payable


Recovery from the employee



Balancing amount (if it is positive).

In the above cases purpose for which assets are provided by employer is irrelevant.

Case study

Find out the taxable value of the perquisite in the following cases for the assessment year 2016-17 –

Case 1: Mr. X is given a laptop by the employer-company for using it for office and private purposes (ownership is not transferred). Cost of the laptop to the employer is Rs.96,000/-.


Generally laptops are issued to employee for use it for their official duties when they are out of office or at remote areas. Hence these are not treated as any additional benefits accruing to employee.

Further, as discussed in above rules, since Mr. X is provided with a laptop by the employer,henceit is not chargeable to tax.

Case 2: On June 15,2015, the company gives its music system to Mr. Y for domestic use. Ownership is not transferred. Cost of music system (in 2001) to the employer is Rs.15,000/-


Mr. Y is provided a music system by the employer. The taxable value of the perquisites is determined @10% per annum of cost. Accordingly Rs.1192/-(being Rs.15,000*10/100*290 days/365 days in a year) is chargeable to tax each year commencing from AY 2016-17 till the assets kept in his possession. Further if any amount is recovered by employer from employee, same will be deducted in arriving at taxable value.