look news india
Supreme Court's instructions for bank employees: The Supreme Court has given a big blow to bank employees across the country. The Supreme Court has ordered to tax the low rate and interest free loans given by banks to their employees by placing them in the subsidized or convenience category. The Supreme Court has said that the low rate or interest free loan facility provided to the bank employees by their bank is subject to tax, hence the bank employees will have to pay tax on it from now on.
The Supreme Court said that banks give interest free loans to employees. In which they get loan with very little or no interest. Which is a good feature. Which is available only to bank employees. But this facility has a fringe benefit or convenience trade-off. Due to which tax is levied on the loan.
Bank employees organization reached Supreme Court
It is noteworthy that bank employee organizations had challenged a rule of the Income Tax Department in the Supreme Court. Under that rule, this interest free loan facility taken by bank employees comes under the ambit of tax. Subject to taxation under section 17(2)(viii) of the Income Tax Act, 1961 and section 3(7)(i) of the Income Tax Act, 1962.
The facility is taxable under income tax
Justices Sanjiv Khanna and Dipankar Dutta in their judgment said that perquisites are additional benefits attached to an employee's position. The opposite of salary, rather than benefits. The bench said that this matter is related to employment, hence this facility can be considered as a benefit as it is included in the facility given to the bank employees in addition to the salary. Therefore this facility is taxable under the Income Tax Act.