Nothing new in taxing perks: Chawla

The Finance Ministry today said asking the employees to pay taxes on their perquisites is not new because such incentives were under the net even prior to the Fringe Benefit Tax (FBT).

"My understanding is that perquisites were being taxed in the hands of the employees even earlier, prior to the FBT... So there is nothing new which has happened," Finance Secretary Ashok Chawla told media persons here today.

Yesterday, the government notified the new rules for valuing perks like accommodation, conveyance and others given to the salaried class for calculating their tax liability. The proposal will be effective from April 1, 2009.

Perquisites given by the employer such as residential accommodation, conveyance facility and other benefits to the family of the employee would be added to the salary for income tax purposes, said the notification.

"The FBT transferred the taxation of perquisites to the employers. Now the regime has changed back and there is no FBT so quite logically it goes back to the employees in the manner it was being taxed earlier," Chawla added.

Earlier, the tax on perks were paid by the employer in the form of the FBT that was done away with in Budget 2009-10 by Finance Minister Pranab Mukherjee. The FBT was imposed in 2005 on the value of specified benefits provided by employers to employees.