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CS Executive · Tax Laws and Practice · Income under the Head Salary

An employer provides a non-monetary perquisite to an employee. Under the Income-tax Act, 2025, which statement about the tax on it is correct?

The employer may, at its option, pay the tax on the whole or part of a non-monetary perquisite without deducting it from the employee. The tax is worked out at the average rate on salary including the perquisite and is treated as tax deducted at source.

  1. AThe employer may, at its option, pay the tax on the whole or part of that perquisite without deducting it from the employeeCorrect
  2. BThe employer must deduct the tax from the employee's cash salary in every case
  3. CThe perquisite is never taxable in the employee's hands
  4. DOnly the employee can pay the tax, and only at the time of filing the return

Explanation

Section 392(2) allows the person paying a non-monetary perquisite to pay tax on the whole or part of it at his option without deduction. The tax is computed at the average rate on salary including the perquisite and is treated as tax deducted at source.

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