Section 10(10CC) of the Income Tax Act, 1961 exempts the income tax paid by the employer on behalf of the employee on non-monetary perquisites.

Non-monetary perquisites are benefits that are provided to the employee by the employer, but are not in the form of cash. Some examples of non-monetary perquisites includes under Income Tax Act:

• Housing
• Car
• Medical insurance
• Leave travel concession (LTC)
• Club membership
• Educational allowance
• Gift

If the employer pays the income tax on the non-monetary perquisite on behalf of the employee, then the employee is exempt from paying tax on the income tax paid by the employer.

For example, if the employer provides the employee with a car and pays the income tax on the car on behalf of the employee, then the employee is exempt from paying tax on the income tax paid by the employer.

The exemption under Section 10(10CC) under Income Tax Act is only available if the following conditions are met:

• The perquisite must be non-monetary.
• The employer must have paid the income tax on the perquisite on behalf of the employee.

EXAMPLE

• Employer pays tax on behalf of employee on the value of a car that is provided to the employee’s spouse or child.
• Employer pays tax on behalf of employee on the value of a laptop that is provided to the employee for official and personal use.
• Employer pays tax on behalf of employee on the value of a mobile phone that is provided to the employee’s driver.
• Employer pays tax on behalf of employee on the value of a medical insurance policy that is provided to the employee’s family members.

CASE LAWS

• Sedco Forex International Drilling Inc. v. ITO (2012): The Uttarakhand High Court held that income tax paid by the employer on behalf of the employee on a non-monetary perquisite qualifies as a non-monetary perquisite and is exempt from tax under Section 10(10CC).
• RBF Rig Corp. v. ITO (2013): The Delhi Tribunal held that income tax paid by the employer on behalf of the employee on a non-monetary perquisite qualifies as a non-monetary perquisite and is exempt from tax under Section 10(10CC).
• CIT v. Tech Mahindra Ltd. (2014): The Delhi High Court held that income tax paid by the employer on behalf of the employee on a non-monetary perquisite qualifies as a non-monetary perquisite and is exempt from tax under Section 10(10CC).

FAQ QUESTION

Q: What is Section 10(10CC) of the Income Tax Act?

A: Section 10(10CC) of the Income Tax Act exempts the income tax paid by the employer on non-monetary perquisites provided to the employee.

Q: What are non-monetary perquisites under the Income Tax Act?

A: Non-monetary perquisites are benefits that are provided to the employee in kind, such as company car, housing, medical insurance, etc.

Q: How does Section 10(10CC) under Income Tax Act work?

A: If the employer pays the income tax on the non-monetary perquisite on behalf of the employee, then the employee will not be liable to pay tax on the perquisite.

Q: What are some examples of non-monetary perquisites that are covered by Section 10(10CC) under Income Tax Act?

A: Some examples of non-monetary perquisites that are covered by Section 10(10CC) under Income Tax Act include:

• Company car
• Housing
• Medical insurance
• Club membership
• Educational allowance
• Leave travel concession

Q: What are the implications of not declaring the tax paid by the employer on non-monetary perquisite under Income Tax Act?

A: If the employee does not declare the tax paid by the employer on non-monetary perquisite, then they may be liable for tax evasion penalties.