Software companies which enjoy tax breaks are expected to benefit from the Budget proposal which allows employers option to pay tax on behalf of employees for non-monetary perks. While the employee benefits as the portion of non-monetary perks does not bloat his income and his tax liability is limited to the cash portion, employers enjoying tax breaks would incur less or no costs on account of non-tax deductibility and the employee benefits to that extent.
The proposal which is part of the Finance Bill seeks to amend the Income tax Act to enable the employer to pay the tax on non-monetary perquisites to an employee.
According to India Life Hewitt, a payroll and pension outsourcing company, this option to the employer is available from the current fiscal year itself (2001-02).
