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Employees exempt from filing perks details

BS Economy Bureau

The finance ministry has granted some reprieve to salaried employees on taxation of perquisites by placing the onus of providing documents for expenses incurred on cars, credit cards and clubs, on the employer.

According to the Central Board of Direct Taxes, the onus of providing documents relating to expenditure incurred by an employee on maintaining his car and credit card or club expenses, would be on the employer and not the employee.

Earlier, it was mandatory for the employee and sometimes even his supervisor to provide a certificate that the expenditure was incurred by him on official duty.

The CBDT on Tuesday said based on representations that the draft rules had made the documentation process very cumbersome, it was exploring two options.

One was to place the onus of documentation on the employer and the other alternative being considered was to adopt the system of ad hoc percentages.

The draft rules had proposed to take the perquisite value for reimbursement of maintenance expenses of motor cars, credit cards and club membership at specified percentages.

Interestingly, even when the employee uses the car partly for personal or private use, the running and maintenance charges including remuneration of the chauffeur being met by the employer, the CBDT's new proposal says the documentation onus would be on the employer and not the employee.

The CBDT has also said that in case of credit cards, for expenses incurred by the employer on behalf of the employee, it would be the employer who would provide the tax authorities with complete details including the date and nature of the expenditure.

Further, the employer would also have to provide a certificate that the expenses were incurred by the employee wholly and exclusively for the performance of official duties.

For club expenses too, the CBDT has shifted the burden of documentation to the employer from the employee asking the former to provide the department with details of the expenditure along with a certificate that the employee had incurred the expenses for official purposes only.

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