Tax paid by co on employee’s behalf a non-monetary perquisite

The above position does have a flip side, as the employer will have to forego the corporate tax deduction if it pays tax on behalf of the employee. This means the employer will have to weigh the benefits between personal tax saving and corporate tax dis allowance to decide which way to go. An interesting point to note is that the proposed Direct Taxes Code has eliminated Section 10(10CC) of Income Tax Act, 1961. In case of secondments to different countries, it is a common practice for employers (globally) to 'tax equalise' or 'tax protect' their employees from differential tax liabilities arising due to the tax laws of two countries (home and host).

Hence, greater clarity on the issue of tax payment in India will help companies develop or operate global policies while seconding employees to India.

The author is senior tax professional, Ernst & Young. Views expressed are personal

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