Assets Transfered to Employee by a company(Tax implication)
kamal Jangid
(Querist) 01 July 2009
This query is : Resolved
Our company given the assets like car,laptops,mobile etc etc to employees now we are going to make a policy that if any body used assets for more than three year than he can buy the assets.
Now i want to know is there is any tax implication or any other legal issue comes under this thransfer.
Also help me to determine to transfer price i.e. on which price WDV as per IT or WDV as per Company Law or Market price or any other manner.
What is industries partice on this type transaction ?
Thanks & Regards
Kamal
A V Vishal
(Expert) 01 July 2009
Dear Kamal
As per the Income Tax Act, S 17(2) defines perquisites(Rule 3):
The value of benefit to the employee resulting from the use by the employee or any member of his household of any movable asset (other than assets already specified in this rule and other than laptops and computers) belonging to the employer or hired by him shall be determined at 10% per annum of the actual cost of such asset or the amount of rent or charge paid or payable by the employer, as the case may be, as reduced by the amount, if any, paid or recovered from the employee for such use.
(viii) The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his household shall be determined to be the amount representing the actual cost of such asset to the employer as reduced by the cost of normal wear and tear calculated at the rate of 10% of such cost for each completed year during which such asset was put to use by the employer and as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer:
Provided that in the case of computers and electronic items, the normal wear and tear would be calculated at the rate of 50% and in the case of motor cars at the rate of 20% by the reducing balance method.
