The Supreme Court on Monday sought response from the finance ministry, the Central Board of Direct Taxes (CBDT) and others on a plea challenging an income tax law.
The Supreme Court on Monday sought response from the finance ministry, the Central Board of Direct Taxes (CBDT) and others on a plea challenging an income tax law that empowers authorities to prescribe value of any additional income (fringe benefit or amenity/perquisites) to the bank employees for taxation purposes.
A bench headed by Justice Kurien Joseph issued notice to the finance ministry, the CBDT, the income tax department, the Federal Bank, the Kerala government and others after the All India Bank Officers Confederation (AIBOC) sought to declare the provision as “unconstitutional”. Various other banking staff associations have moved the apex court on the issue. The apex court has also restrained the income tax department from levying or collecting or deducting any tax from the salary of the bank officers during the pendency of the appeals.
AIBOC has challenged the Madras High Court’s April last year’s judgment that rejected its contention that Parliament ought not to have given to the executive the right to prescribe the value of “perquisites” without any restrictions. The banking body said such fiscal liability can only be fixed by a competent legislature under the statute and no such tax or fiscal liability can be imposed by Rules/subordinate legislation.
You might also want to see this:
“Hence impugned Rule 3 (7) (i), which seeks to prescribe, interest free loan or loan at concessional rate granted by the employer to the employee, as a perquisite, is ex-facie not only beyond the scope and power which can be available under the Rules but also ultra vires provisions of Income Tax Act…,” the petition stated.
According to it, interest-free loan or loan at concessional rate granted by the employer to the employee cannot be a perquisite as envisaged under the diverse provisions of Income Tax Act.