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CA Intermediate · Taxation · Salaries

Arvind, a private company executive, has basic salary plus dearness allowance of ₹40,00,000 for tax year 2026-27. During the year his employer contributed ₹3,00,000 to his recognised provident fund, ₹4,00,000 to his NPS account and ₹1,50,000 to an approved superannuation fund. Ignoring interest on provident fund and any deduction Arvind may claim for the NPS contribution, what amount is chargeable as a perquisite on account of these employer contributions?

The perquisite is ₹1,00,000. The recognised provident fund contribution is within the 12% limit, but employer contributions to provident fund, NPS and superannuation together total ₹8,50,000. Only the amount above the ₹7,50,000 aggregate cap is taxable as a perquisite, which leaves ₹1,00,000.

  1. A₹1,00,000Correct
  2. B₹8,50,000
  3. C₹1,50,000
  4. DNil

Explanation

The recognised provident fund contribution of ₹3,00,000 is within 12% of salary (₹4,80,000), so it is not taxable on that ground. However, the aggregate employer contribution to the recognised provident fund, NPS and approved superannuation fund is 3,00,000 + 4,00,000 + 1,50,000 = ₹8,50,000. The excess over the aggregate cap of ₹7,50,000 is ₹1,00,000, which is taxable as a perquisite. Taxing the whole ₹8,50,000 or only the superannuation amount is wrong.

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