Availed concessional mortgage from employer amid covid? Know the tax implications

With the covid-19 pandemic inflicting extreme monetary stress, lots of people have sought assist from their employers to fulfill medical bills. While some employers have paid for covid-19 therapy of their staff, others have offered loans to pay for it.

If an employer gives monetary help to pay for covid therapy, it’s tax-free within the palms of the worker, as per the federal government’s latest notification. If the employer gives assist in the type of a mortgage at a concessional fee, the profit derived by way of the speed is taxable. Employees could avail loans from employers to fund kids’s training, medical emergency, marriage, and so on, relying on the corporate’s insurance policies. Employers could provide these loans at zero or low-interest charges. However, the profit derived from a decrease rate of interest will probably be thought of as perquisite within the hand of the worker.

“Employers must be further cautious because the tax division levies tax on such profit contemplating it as perquisite within the palms of the worker since they’re benefited when it comes to financial savings in curiosity quantity which they in any other case needed to pay had the mortgage was taken from exterior. The employer is liable to deduct TDS on this earnings because it kinds a part of the wage. However, if the employer fails to deduct the TDS, it turns into the duty of the worker to pay taxes on it,” mentioned Tarun Kumar, a Delhi-based chartered accountant.

There is a technique of calculation of the tax quantity. “The taxable worth within the palms of the worker shall be calculated on month-to-month foundation on the excellent stability of the mortgage on the final day of every month. The curiosity shall be computed on this quantity on the fee of curiosity as charged by the State Bank of India on the primary day of the related monetary 12 months in respect of an analogous mortgage (say, training mortgage, car mortgage, residence mortgage or private mortgage). This curiosity is decreased by curiosity, if any, recovered from the worker. The stability quantity shall be taxable within the palms of the worker as perquisite,” mentioned Kumar.

There are sure exceptions to the rule. In case the quantity of mortgage given to the worker is as much as ₹20,000 in mixture, it’s not taxable. If the mortgage is taken for medical therapy of specified illnesses in accredited hospitals, the identical won’t be taxable.

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