PERQUISITE ON INTEREST FREE LOAN

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Avinash (Querist)
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12 March 2011 Dear

I have a query about interest free loan. As per act, loan amount up to Rs.20000/- is exempt from perquisite. If an emloyee takes interest free loan from its employer of RS.20000/- as on 01.04.2010 & he repaid rs.10000/- in June.2010. Agains he takes a loan of Rs.10000/-in July.10, now the loan balance is Rs.20000/-. Now, the aggreegate loan sanctioned during the year is Rs.30000/- but individually loan sacntioend are Rs.20000/- & Rs.10000/- How should we calculate for valuation of interest free loan.

Thanking you,

K.Srini

K.Srini (Expert)
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14 March 2011 The provision of Rs. 20000/- is an aggregate amount. Hence even if the loan amounts are petty but aggregate exceeds Rs. 20000/- then it cannot be exempted by the proviso to rule 3(7) and you have to consider it for the purpose of perq valuation. The interest has to be calculated on the monthly basis on the maximum outstanding for each month