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FINAL MAY2010 DT- PERQUISITES VALUATION

ASH (nil) (77 Points)

03 March 2010

Notification for perquisites valuation was issued on 18/12/2009 ( Notifcation after the date for May 2010 cutoff ie 30/11/2009) but this valuation applicable from 1/4/2009.

My question whether this notification should be considered for exam preperation and for solving problem in exam?

Any clarification from ICAI.

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3 Replies

Amir (Learner) (4016 Points)
Replied 03 March 2010

Hey Friend,

I think it will be applicable for May 2010,

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CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 03 March 2010

No, it is not applicable for May, 2010 exams. Refer ICAI Announcement dt.23-02-2010. (See the Student Menu)

Amir (Learner) (4016 Points)
Replied 03 March 2010

Dear Ashok Sir,

Yes thanks for correcting, Rule 3 of old rules will be applicable for May 2010 -

(1) Fringe Benefit Tax is not applicable from A.Y.2010-11 and hence, is not relevant for May 2010 examination.

(2) Consequential Notification of new perquisite rules on 18.12.2009 not to apply for May 2010 examination

Consequent to abolition of fringe benefit tax, certain benefits taxed earlier as fringe benefits in the hands of the employer would now be taxable as perquisites in the hands of the employees. For this purpose, new perquisite valuation rules have been notified vide Notification No.94/2009/ F.No.142/25/2009-S.O.(TPL), dated 18.12.2009 with retrospective effect from 1.4.2009. However, the new perquisite valuation rules would be applicable only for November 2010 examination. They would not be applicable for May 2010 examination, since only notifications/circulars issued up to 31st October, 2009 are relevant for May 2010 examination.

(3) Applicability of erstwhile Rule 3 for May 2010 examination

Therefore, the erstwhile Rule 3 would be applicable for May 2010 examination. All the perquisites which were earlier taxable in the hands of the employee, only if the employer was not liable to pay fringe benefit tax, would now be taxable in the hands of the employee in all cases, since no employer is liable to pay fringe benefit tax for A.Y.2010-11.
Rule 3(7), providing for valuation of “other fringe benefits and amenities”, is based on the terms of the provisions contained in the erstwhile clause (vi) of section 17(2). The Finance (No.2) Act, 2009 has amended section 17(2) by including certain other perquisites under clauses (vi) and (vii) of section 17(2). Consequently, the residual clause, namely, clause (viii) of section 17(2), now provides for taxing the value of any other fringe benefit or amenity as may be prescribed. Therefore, the Rule 3(7), prescribing the fringe benefits or amenities in terms of the erstwhile clause (vi) [now clause (viii)] of section 17(2)] have been given in the latest study material relevant for May 2010 examination.