Following are the perquisites which are taxable in the hands of Specified Employees only:

1. Sweeper, gardener or watchman provided by the employer

   The value of benefit of provision of services of sweeper, watchman, gardener or personal attendant to the employee or any member of his household shall be the actual cost to the employer. The actual cost in such a case is the total amount of salary paid or payable by the employer or any other person on his behalf for such services.

2. Free Supply of Gas, Electricity or Water

   The value of these benefits is taxable in the hands of specified employees, if the connection is taken in the name of the employer, and is determined according to the following two rules:

   a) If the employer provides the supply of gas, electricity, and water from its own sources, the manufacturing cost per unit incurred by the employer shall be the value of perquisite.
   
   b) If the supply is from any other outside agency, the value of perquisite shall be the amount paid by the employer to the agency supplying these facilities.
   
   

3. Free Education

   a) Cost of free education to any member of employees' family provided in an educational institution owned and maintained by the employer shall be determined with reference to reasonable cost of such education in a similar institution in a near by locality. For education facilities provided to the children of employee (excluding any other member of house hold), the value shall be Nil, if the cost of such education per child does not exceed Rs.1, 000 per month.
   
   
   b) Where free education facilities are allowed to any member of employees' family in any other educational institution by reason of his being in employment of that employer, the value of perquisite shall be determined as in (a).
   
   
   c) In any other case the value of benefit of providing free or concessional educational facilities for any member of the house hold (including children) of the employee shall be the amount of expenditure incurred by the employer.

PLEASE NOTE:

• Before understanding the Taxability this category of perquisites it is necessary to pass the Litmus test to determine whether you are a Specified or a Non - Specified Employee, being summarized as:


SPECIFIED EMPLOYEE:



1. A Director Employee is a specified employee in the company in which he is a Director, irrespective of the fact whether he was full time or part time.
   
   

2. An Employee having Substantial Interest, i.e., 20 % or more of Voting power in the Employer company

3. An Employee drawing Salary in excess of Rs. 50,000/-, where salary includes, All non monetary benefits + Only taxable part of Allowances Less Deduction for Entertainment Allowances and Professional tax.

• If An Employee does not fall in the above defined classes he is a Non Specified Employee.

In case of all the three perquisites if the services are engaged by the employee consequent to which though the liability for payment of such services falls on the employee but the payment is made by the employer then such perquisite would be taxable in the hands of all employees irrespective of it being a specified or a non-specified employee. Let us take the following example for better clarity:



• The employer of Mrs. X (a specified employee) provides a maid servant on a monthly salary of Rs. 3,000/-. The salary of such maid servant is directly paid by the employer hence the salary so paid would amount to perquisite taxable in hands of Mrs. X since she is a specified employee.
  
  

• In above case if Mrs. X would had been a non specified employee then the salary paid to the maid servant shall not be counted as perquisite taxable in the hands of Mrs. X.
  
  

• Lastly if the services of the maid are engaged by the employer and the salary is paid by Mrs. X for which she claims reimbursement from the employer, the perquisite value would be chargeable to tax since Mrs. X is a specified employee.
  
  

• Say in another case Mrs. X has been provided a gas connection by her employer, the bills of which are paid (or reimbursed) by her employer; hence the amount of bill(s) paid by Mrs. X's employer shall be the taxable value of perquisite in hands of Mrs. X, on account of her being a specified employee.
  
  

• Where any amount is recovered from the employee in respect of the services as discussed in the perquisites above, the amount so recovered from the employee shall be deducted to arrive at the value of perquisite.