Valuation of specified security not being an equity share in a company for the purpose of section 17(2)(vi) [Sub-rule (9)] :

The fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as determined by a merchant banker on the specified date.
For this purpose, “specified date” means,—
(i) the date of exercising of the option; or

(ii) any date earlier than the date of the exercising of the option, not being a date which is more than 180 days earlier than the date of the exercising.

Definitions for the purpose of perquisite rules – The following definitions are relevant for applying the perquisite valuation rules –

(i) “member of household” shall include-

(a) spouse(s),

(b) children and their spouses,

(c) parents, and

(d) servants and dependants;

(ii) “Salary” includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely: –

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employer‘s contribution to the provident fund account of the employee;

(c) allowances which are exempted from payment of tax;

(d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act;

(e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17;

(f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments;

Illustration
X Ltd. provided the following perquisites to its employee Mr.Y for the P.Y.2015-16 –

(1) Accomodation taken on lease by X Ltd. for Rs 15,000 p.m. Rs 5,000 p.m. is recovered from salary of Mr. Y.

(2) Furniture, for which the hire charges paid by X Ltd. is Rs 3,000 p.m. No amount is recovered from the employee in respect of the same.

(3) A Santro Car which is owned by X Ltd. and given to Mr.Y to be used both for official and personal purposes. All running and maintenance expenses are fully met by the employer. He is also provided with a chauffeur.

(4) A gift voucher of Rs 10,000 on his birthday.

Compute the value of perquisites chargeable to tax for the A.Y.2016-17, assuming his salary for perquisite valuation to be Rs 10 lakh.
Solution
Computation of the value of perquisites chargeable to tax in the hands of Mr. Y for the A.Y.2016-17

	Particulars	Amount in Rs
(1)	Value of concessional accommodation Actual amount of lease rental paid by X Ltd.	1,80,000
	15% of salary i.e., 15% of Rs 10,00,000	1,50,000
	Lower of the above	1,50,000
	Less: Rent paid by Mr.Y (Rs 5,000 × 12)	60,000 90,000
	Add: Hire charges paid by X Ltd. for furniture provided for the use of Mr.Y	36,000 1,26,000
(2)	Perquisite value of santro car owned by X Ltd. and provided to Mr.Y for his personal and official use [(Rs 1,800 + Rs 900) × 12]	32,400
(3)	Value of gift voucher Value of perquisites chargeable to tax	10,000 1,68,400