CMA Intermediate · Direct and Indirect Taxation · Salaries
A company provides its employee Kavita with furniture that it owns, bought for ₹2,00,000, for use in her residence throughout the year. Kavita pays ₹5,000 to the employer during the year for this use. Using the usual valuation rule for employer-owned furniture, what is the taxable perquisite?
The taxable perquisite is ₹15,000. Employer-owned furniture is valued at 10% of its cost for the year, which is ₹20,000 on a cost of ₹2,00,000. The ₹5,000 paid by the employee is then deducted, leaving ₹15,000.
- A₹15,000Correct
- B₹20,000
- C₹1,95,000
- D₹25,000
Explanation
For furniture owned by the employer, the value is 10% of its original cost per year. 10% of ₹2,00,000 = ₹20,000. The amount recovered from the employee, ₹5,000, is deducted, leaving ₹15,000. ₹20,000 ignores the recovery, and ₹25,000 adds the recovery instead of deducting it.
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