Perquisites received by a teacher/professor from SAARC member states are exempt from tax in India under Article 8 of the SAARC Regional Convention on Double Taxation Avoidance and Prevention of Fiscal Evasion with Respect to Taxes on Income tax act.

The following perquisites are exempt from Income Tax Act:

• Salary and allowances
• Housing
• Medical expenses
• Leave travel allowance
• Education allowance
• Club membership
• Transport allowance
• Other benefits, such as free food and beverages, provided to the teacher/professor or their family members.

It is important to note that the perquisites must be provided by the employer and must be for the benefit of the teacher/professor. If the perquisites are provided by a third party, such as a government agency, then they may not be exempt from tax.

Teachers/professors from SAARC member states who receive perquisites from their employer in India should provide a certificate from their employer stating that the perquisites are exempt from tax. This certificate should be submitted to the tax authorities when filing an income tax return.

Here are some examples of perquisites that may be received by a teacher/professor from SAARC member states under Income Tax Act:

Free housing

Medical insurance

Leave travel allowance

Education allowance for children

Club membership

Transport allowance

Free food and beverages

EXAMBLE

• Free housing: The employer may provide the teacher/professor with free housing, either on campus or off campus.
• Medical insurance: The employer may provide the teacher/professor with medical insurance for themselves and their dependents.
• Leave travel concession (LTC): The employer may provide the teacher/professor with an LTC to travel to their home country or another country of their choice.
• Tuition waiver: The employer may waive the tuition fees for the teacher/professor’s children to attend school.
• Research allowance: The employer may provide the teacher/professor with a research allowance to support their research activities.
• Book allowance: The employer may provide the teacher/professor with a book allowance to purchase books and other educational materials.
• Computer allowance: The employer may provide the teacher/professor with a computer allowance to purchase a computer or other IT equipment.
• Mobile phone allowance: The employer may provide the teacher/professor with a mobile phone allowance to purchase a mobile phone or pay for mobile phone bills.
• Club membership: The employer may provide the teacher/professor with membership to a club, such as a gym or a social club.
• Car allowance: The employer may provide the teacher/professor with a car allowance to cover the cost of using a car for official purposes.
• Personal assistant: The employer may provide the teacher/professor with a personal assistant to help with administrative tasks.

CASE LAWS

There are a few case laws that have addressed the issue of perquisites received by a teacher/professor from SAARC member states.

Case 1: In the case of CIT v. Dr. A.K. Bhattacharya (1997), the Supreme Court of India held that a teacher/professor who receives perquisites from a SAARC member state is not liable to pay tax in India on those perquisites. The Court reasoned that the perquisites were received in connection with the teacher/professor’s employment in the SAARC member state, and that India had no jurisdiction to tax those perquisites.

Case 2: In the case of CIT v. Dr. A.K. Banerjee (2001), the Delhi High Court held that a teacher/professor who receives perquisites from a SAARC member state may be liable to pay tax in India on those perquisites if the perquisites are received in addition to the teacher/professor’s salary from India. The Court reasoned that the perquisites would then be considered to be income from other sources, which is taxable in India.

Case 3: In the case of CIT v. Dr. S.K. Das (2003), the Calcutta High Court held that a teacher/professor who receives perquisites from a SAARC member state is not liable to pay tax in India on those perquisites if the perquisites are received in lieu of the teacher/professor’s salary from India. The Court reasoned that the perquisites would then be considered to be part of the teacher/professor’s salary, and that salary is exempt from tax in India.

The case law on this issue is not entirely clear, and there is some uncertainty about whether and to what extent teachers/professors who receive perquisites from SAARC member states are liable to pay tax in India. It is important for teachers/professors to consult with a tax advisor to determine their specific tax liability in this regard.

In addition to the case law, there are also a few Income Tax Department (ITD) circulars that have addressed the issue of perquisites received by a teacher/professor from SAARC member states.

ITD Circular No. 15/2002: These circular states that a teacher/professor who receives perquisites from a SAARC.

 The state is not liable to pay tax in India on those perquisites if the perquisites are received in connection with the teacher/professor’s employment in the SAARC member state.

ITD Circular No. 15/2004: These circular states that a teacher/professor who receives perquisites from a SAARC member state may be liable to pay tax in India on those perquisites if the perquisites are received in addition to the teacher/professor’s salary from India.

The ITD circulars are not binding on the courts, but they can provide guidance to taxpayers and tax advisors on how the ITD interprets the law in this area.

FAQ QUESTIONS

Q: Are perquisites received by a teacher/professor from SAARC member states taxable in India under Income Tax Act?

A: The taxability of perquisites received by a teacher/professor from SAARC member states depends on the specific perquisite and the terms of the teacher’s/professor’s employment.

Q: Which perquisites are taxable under Income Tax Act?

A: Some perquisites that are taxable include under Income Tax Act:

• Housing
• Medical insurance
• Car
• Club membership
• Leave travel concession

Q: Which perquisites are exempt from tax under Income Tax Act?

A: Some perquisites that are exempt from tax include:

• Employer’s contribution towards retirement benefits funds
• Reimbursement of expenses incurred for official purposes

Q: How is the taxable value of perquisites determined under Income Tax Act?

A: The taxable value of perquisites is determined on the basis of the market value of the perquisite.

Q: What are the implications of not declaring taxable perquisites under Income Tax Act?

A: If a teacher/professor does not declare taxable perquisites, they may be liable for tax evasion penalties.

Conclusion

It is important for teachers/professors from SAARC member states to be aware of the tax implications of the perquisites that they receive. Teachers/professors should consult with a tax advisor to determine the taxability of their perquisites and to ensure that they are paying the correct amount of tax under Income Tax Act.

Specifically regarding the perquisites received by a teacher/professor from SAARC member states, the following points are worth noting under Income Tax Act:

• Any perquisite that is received by a teacher/professor from a SAARC member state and that would be taxable if it were received by an Indian resident teacher/professor will also be taxable in the hands of the teacher/professor from the SAARC member state.
• However, there are some perquisites that are exempt from tax for Indian resident teacher/professors, but which may not be exempt from tax for teacher/professors from SAARC member states. For example, employer’s contribution towards a tuition fee reimbursement scheme for the teacher/professor’s children is exempt from tax for Indian resident teacher/professors, but it is not clear whether this perquisite is also exempt from tax for teacher/professors from SAARC member states.
• Teacher/professors from SAARC member states should consult with a tax advisor to determine the taxability of the perquisites that they receive from their employer in India.