SC on Income Tax: The union of bank employees and officers had challenged the rules of the Income Tax Department in the Supreme Court, where they were disappointed…
Income Tax: The Supreme Court has given a strong blow to lakhs of bank employees. The Supreme Court has said in a recent decision that bank employees are liable to pay tax on the facility of loan provided to them at concessional rate or without interest by their employer banks. This means that now bank employees will have to pay tax on such loans.
These loans of bank employees are unique
The Supreme Court upheld the income tax rules in this regard. The apex court said that this facility is specially given to the bank employees by the banks, in which they get loan either at low interest or without interest. According to the court, this is a unique facility, which is available only to bank employees. The Supreme Court termed this as fringe benefits or amenities and said that due to this such loans become taxable.
Bank unions had given challenge
In fact, the organizations of bank employees had challenged a rule of the Income Tax Department in the Supreme Court, under which the loan facility available exclusively to bank employees has been made taxable. Perquisites have been defined under Section 17(2)(viii) of the Income Tax Act 1961 and Rule 3(7)(i) of the Income Tax Rules 1962. Perks are those facilities which any person gets in addition to his salary due to his work/job.
Income Tax Department’s stand is correct
Employees’ unions and officers’ associations of various banks had challenged the legality of the relevant provisions of the Income Tax Act and Income Tax Rules in the Supreme Court. However, the Supreme Court in its hearing accepted the Income Tax Department’s stand as correct.
Supreme Court gave this order
The Supreme Court bench of Justice Sanjeev Khanna and Justice Dipankar Dutta said – The loan facility that banks provide to their employees at low or no interest is linked to their current employment or future employment. In such a situation, it gets included in the facilities provided to the employees apart from salary and can be considered as perks. This means that this facility becomes taxable as per the relevant income tax rules. The bench also approved using SBI’s prime lending rate as a benchmark for tax calculation.
