Accommodation Perquisite Tax & Government Autonomous Institutes

 Accommodation Perquisite Tax & Government Autonomous Institutes



Problem: 


Should Government Autonomous Institutes need to pay a perquisite tax for house accommodation given to its employees, when some institutes of same status are exempted for the same?


What rules say: Section 17 (2), Indian Income tax Act says perquisite tax applicable for rent free accommodation or incase concession in  rent is given. On application of section 17 (2), Page 21 of deptt circular considers only licence fee as value of perquisite for Government employees but Government autonomous institution’s perquisites are calculated by different rule. And a significant difference in the liabilities of both the types of employees occur.


NB: https://www.incometaxindia.gov.in/communications/circular/circular_no_4_2020.pdf



Complex Practices:


  1. A university at Hisar need not to deduct the income tax as tax department could not show that a concession in rent is given to employees and hence rule 17 (2) not even applicable on HUA. Supreme Court rulings on Arun Kumar also cited here

NB: https://indiankanoon.org/doc/60075902/?type=print


  1. IISC which is a society run autonomous institute was accepted as Govt. institute and now IISC need not to deduct the perquisite taxes for its employees. The decision should be right as section 2.14 of income tax act defines employer who has ultimate control on the affairs of establishment. So all the Govt. autonomous institutions, even though they come under section 17 (2), the modalities of perquisite tax deduction should be at par with Govt. employees.


NB:https://www.legitquest.com/case/indian-institute-of-science-bangalore-v-dcit-bangalore/12F361


Despite above reasons of not paying perquisite tax at all or paying tax at par with Govt. employees, the following practices are making it complex:


  1. Tax department manual from Delhi still treats autonomous Govt. institutes separately


  1. IIT Guwahati takes note that their Ministry did not consider to their employees at par with Govt. in this regard and IITG aims to discuss with other IITs 

NB: https://www.iitg.ac.in/pdf/767587BOG_PDFOG_PDF.pdf

  1. Others: https://www.iitbhu.ac.in/contents/institute/2018/notification/noti_recovery_itcircular_7394.pdf



Reflections:


  1. Are the assess/employers/tax authority duly considering that many Govt. controlled autonomous institution employees are not provided any concession in rent and all employees in the same category are treated at par and as per Govt. norms?


  1.  Who can deny that even in  purest autonomous institutions e.g. IIMs are ultimately controlled by the Govt only. Hence as per the income tax act, employer would be Govt. only for this purpose. So why impose separate banket norms for all autonomous institutions?


  1. Any undue tax already paid wont be returned to affected employees after a certain period so employers/ tax authorities are other authorities need to mitigate the complexities and restore the fairness.





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