The government can gain as much as Rs 565 crore by taxing perquisites of employees of the Railways, Indian Airlines and Air-India in the nature of free and concessional travel privileges.
The Central Board of Direct Taxes notification on taxation of perquisites issued on September 25 calls upon the employer to deduct the tax payable on the value of free tickets for employees.
The notification states that the value of any benefit provided by an undertaking engaged in the carriage of passengers to an employee or his household for private journey free of cost or at concessional fare, shall be taken to be the value at which such benefit is offered by it (undertaking) to the public.
The finance ministry has however not yet said how the tax deductions would be made. But officials have clarified that according to Rule 2B of the Income Tax Act , a single bi-yearly travel by the employees is exempt from the new provision. Back of the envelope calculations reveal that the total value of taxable perks provided to employees of the Railways, IA and A-I is around Rs 1,713 crore per annum, excluding the single bi-yearly travel. At a tax rate of 33 per cent , CBDT would be able to mop up approximately Rs 565 crore.
Each pass provided by the state-owned carriers to its employees is valued at Rs 60,000 to Rs 75,000 approximately, as per airline executives. Passes imply tickets to a family including dependents. Air-India gives two free passes (including international travel on any route) and unlimited concessional passes to its 17,000 employees annually. Free passes can be valued at Rs 254 crore (excluding concessional passes).
Indian Airlines provides four concessional and two free passes to its 18,000 employees. The free passes can be valued at Rs 270 crore approximately a year.
The Indian Railways provide six free (AC-I, II, III) and four concessional passes a year to their 14,600 group A&B (gazette) employees. At the value of Rs 15,000-20,000 per pass, annual free travel is valued at Rs 175 crore.
The balance 1,563,800 employees (as on March 31, 1999) are provided one to three free passes annually. Valued at Rs 3,000-4,000 per pass, the total free travel provided by the Indian Railways to all their employees is approximately Rs 1,845 crore (excluding privileged ticket orders provided at concessional rates).
Officials told Business Standard that they are working out the modalities of preparing the requisite forms to calculate the tax as at present there are no such formats available for it.
