Perquiste value of free or concessional educational facility

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Sumeet Agarwal (Querist)
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09 February 2012 On reading the section 17(2) of the IT Act,1961 with rule 3, it is clear that value of benefit to the employee from provison where educational institution is maintained or owned by company or where free educational facilities for such member of employees’ household are allowed in any other educational institution by reason of his being in employment of that employer, shall be determined with reference to the cost of such education in a similar institution in or near the locality. However the local limit or area within which such educational institution should be situated. Also what constitute similar institute is alos not defined.In my case, company maintained a hindi medium school tp provide educational institute. There is no institue in near by area. Then, how can we determine the perquiste value of such free educational institute ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 February 2012 Such determination is required where cost of providing education exceeds Rs. 1000/per month per child.
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It may be possible that the Institution provides educational facility to other students ( also) by charging a fee. In such situation that fee may be taken as a basis.
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For comparison, it may really difficult to find a similar institution. However, it is not difficult to find another school which is nearest to the institution.
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Logic may be given that both the institutions are providing the similar education/ under the same Board/ or under the same Education Governing Body for developing some sort of similarity.
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Lastly- if nothing is possible, find out average cost per child per month of the institution, which is being borne by the Company. From such cost deduct Rs. 1000/ pm.
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