The income tax department has finally notified the new rules laying down the valuation mechanism for perquisites (‘perk rules’) given to employees by the employers. The new perk rules were long over due ever since the Finance 
Minister abolished the Fringe Benefit Tax (FBT) in the previous Budget.
The new perk rules have replaced the old perk rules contained in Rule 3 of the Income tax Rules, 1962, (Rules) with retrospective effect from 1st April, 2009.
Effective from:
The rules to enable this provision have been notified only now in December, 2009. This implies that every employer will have to rework the taxable salary for its employees for the months for which salary has already been paid (April to November) and consequent increase, if any, in the tax to be deducted at source will have to be recovered and paid immediately to avoid interest payments.
What’s new?
The new perk rules were supposed to be introduced since FBT was abolished by the Finance Act, 2009. Since the FBT cast a very wide net and brought within its purview several expenses, there was considerable speculation as to how the new perk rules would deal with the various expenses that were subject to FBT. The question that most people were asking was whether the Finance Minister would try to tax the expenses (that were hitherto subject to FBT) as perquisites in the hands of employees.
Some of the important items of expense which were subject to FBT and in respect of which experts were divided on the question of taxability as a perquisite are traveling expenses, telephone expenses, club expenses etc. Fortunately, the new rules do not seek to tax many of the expenses that were subjected to FBT. In effect, the new Rule 3 is very similar to the old Rule 3 as it stood before it was amended in pursuance of the enactment of the sections dealing with FBT.
Example:
The new rules will have an impact on your taxes if:
- you use a company owned vehicle
- you use your own vehicle and claim a reimbursement from the employer
- your employer provides free food
- you get meal coupons
In all these cases, the value of these benefits would be considered as perquisite value and taxed accordingly.
To read the complete analysis of this provision, Click here for – New Perquisite Rules
Is this rules are applicable for May 2010 Pcc attempt. please suggest me