There are different assets which are given by the employer to the employee during the course of the employment to its employees so that it can fulfill his duties and once the work is completed employer has the option of transferring those assets to the employee at the lower cost. Since depreciated value of these asset is higher than what has been recovered from employee for such asset and from income tax perspective it is treated as perquisite and tax is payable on such additional value.
Valuations of these assets are done according to their tenure of use by the company. For Computer and electronic items depreciation of 50% is to be provided for each completed years means 1 year from the day of purchase and value of asset is reduced by 50%. I.e. Cost of asset is Rs 100/- after one year value is reduced by Rs 50/- and at the end of second year it will be reduced by Rs 25/- and at the end of third year it is reduced by Rs 12.5/- and value at the end of third year will be Rs 12.5/- for that asset for calculation of perquisites.
For Motor Car it will be 20% rate WDV (Written Down Value Method) and for any other asset it will 10% SLM (Straight Line Method).
Computer or electronic items
Cost of employer [purchase cost]
Less: 50% of WDV for each completed year [faction ignore]
Less: any mount recovered from employer
| If positive = perquisite |
Motor car
Cost of employer
Less: 20% of WDV for each completed year [faction ignore]
Less: any mount recovered from employer
| If positive = perquisite |
Any other asset
Cost of employer
Less: 10% of SLM for each completed year [faction ignore]
Less: any mount recovered from employer
| If positive = perquisite |