★ what fo you mean by salary?Discuss the rules of valuation of perquisites under the head of salary in income tax act?
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**Salary:**
Salary refers to the fixed regular payment made by an employer to an employee for the work performed or services rendered. It typically includes basic pay along with allowances, bonuses, and other monetary benefits. Salary is a key component of an employee's total compensation package.
**Rules of Valuation of Perquisites under the Head of Salary in Income Tax Act:**
1. **Rent-Free Accommodation:**
- Valuation: 15% of Salary (Salary includes basic pay, dearness allowance, and any other fixed monthly allowance).
- If accommodation is taken on lease, actual lease rental paid by the employer is considered.
2. **Motor Car Provided by Employer:**
- Valuation:
- If the car is owned or hired by the employer: Actual expenses on maintenance, running, and driver's remuneration, less any amount recovered from the employee.
- If the car is owned by the employer and the employee bears the running expenses: Rs. 1,800 per month.
- If the car is owned by the employer and is used partly for personal and partly for official purposes: Rs. 600 per month.
3. **Free or Concessional Education:**
- Valuation: Cost of education in a similar institution or the actual expenditure by the employer, whichever is lower.
4. **Interest-Free or Concessional Loans:**
- Valuation: Interest calculated at the rate charged by the State Bank of India on the 1st day of the relevant previous year on the maximum outstanding monthly balance.
5. **Gifts and Transfers:**
- Valuation: The aggregate fair market value of specified movable assets, without consideration or for inadequate consideration, less any amount paid by the employee.
6. **Free Meals:**
- Valuation: Cost to the employer.
7. **Stock Options:**
- Valuation: As per the prescribed method specified by the Income Tax Act.
8. **Any Other Perquisite:**
- Valuation: The value of any other benefit or amenity as may be prescribed by the income tax rules.
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