Interest on Loan given by Employer to Employee

If loan is provided to an employee, then the interest on loan is taxable Perquisite.

Exception

However it is tax free when

1. Loan Amt is Small (upto 20000)
2. Loan is for treatment for specified medical diseases of self or family. Here family means Self,Spouse,Children,Children's spouse,Parents ,Servants and Dependants

• How to Calculate Interest

• SBI interest rate as on 1st  April is to be taken.For example – for 2015 -16 financial year SBI interest rate as on 1st  April 2015 to be taken.

• SBI interest is to be calculated on the maximum amount of Loan outstanding per month.
• Interest Rate on relevant loan is to be taken
• For example –If Education Loan given then interest rate on education loan of SBI to be taken and so on
• If any interest recovered from employees, then, that to be reduced while calculating taxable perquisite

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QUESTIONS

Q1 State whether followings are taxable

1. Personal Loan of 20000 for Daughter' Marriage

b.Personal Loan of 100000 for Daughters Marriage

c.Medical Loan for specified disease of son of 100000

d.Medical Loan for other diseases(not specified) of son of 100000

e.Medical Loan for other diseases(not specified) of son of 5000

Q2

 Employee took a loan on 10 ^th   April from company for daughter' marriage   

Rate of Interest=10% as per SBI as on 1 ^st April on personal loan.

His Loan account is as follows

What is the

Maximum Amount of loan outstanding

and

Taxable Perquisite?

Q3  Suppose in previous question the Employee pays 7 % interest on Loan

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Ans. 10%-7% =3% is taxable

In this case value of Perquisite will be calculated by taking

         interest rate as 3% instead of 10%

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