Shades Of Grey

This is the third part of the series on the recently amended rules on perquisites and payments

In the third part of our series we take a detailed look at perks.

Leave travel

The value of travelling, touring, accommodation and any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee, shall be the expenditure incurred by the employer on that behalf. Where such facility is maintained by the employer and is not available to all employees, the value of the benefit shall be taken to be the value at which such facilities are offered by other agencies to the public.

Any facility provided to any member of the family accompanying the employee on an official tour shall be deemed to be a perquisite. Where an official tour is extended as a vacation, the value of the perk shall be limited to the expenses incurred during the extended period.

Comments: As per the old rule, the exemption was limited up to:-

* Where the journey was by air, an amount that did not exceed the air economy fare of the national carrier by the shortest route to the place of destination.

* Where places of origin of journey and destination are connected by rail and the journey was performed by any mode of transport other than air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination.

* Where the origin of journey and destination or part thereof are not connected by rail, the exemption shall not exceed i) where a recognised public transport system exists, the first class or deluxe class fare by the shortest route and ii) where such system does not exist, air-conditioned first class rail fare applicable to the distance.

This exemption was limited to two journeys in a block of four calendar years beginning from 1986. Where an individual had not taken any leave travel allowance (LTA) during one block, he could avail of it during the first year of the next block. If he did not travel during any of these years, he lost the privilege.

The current block of four years was from January 1, 1998 to December 31, 2001. Note that while normally tax matters dealt with the financial year, the LTA was for the calendar year.

A family included the spouse, children as well as dependent parents, brothers and sisters. However, for children born on or after October 1, 1998, the exemption was restricted only to two surviving children unless the birth after one child had resulted in multiple births.

Now the definition of the family is more liberal. It includes parents, any number of children and also their spouses, and other dependent family members, and even servants.

Meals

The value of free meals (tea and snacks) provided by the employer to an employee shall be the expenditure incurred by the employer. This sub-rule shall not apply to free meals during office hours at office or business premises or through paid vouchers which are non-transferable and usable at eating places. For this purpose, the cost of a meal should not exceed Rs 50. This sub-rule shall also not apply to meals provided during office hours in a remote area or an offshore installation.

Comments: The draft required the meals to be