## Use and Transfer of Movable Assets; Other Benefits [Rule 3(7)]

### 7. Use of Movable Assets

Asset given for use	Value of benefit
Laptops & computers	Nil
Other movable assets (own asset)	10% p.a. of actual cost
Other movable assets (rented)	Actual rent paid

### 8. Transfer of Movable Assets

When the employer transfers (sells/gives) a movable asset to the employee, compute the written-down value after notional depreciation for every completed year of use:

Particulars	Amount
Original cost	XXXX
Less: Notional depreciation (per specified rate, per completed year)	(XXX)
WDV = Gross perquisite value	XXXX
Less: Amount recovered from employee	(XXX)
Taxable perquisite	XXXX

Specified depreciation rates:

Asset type	Rate	Method
Computers & electronics	50%	WDV
Motor cars	20%	WDV
Any other asset	10%	SLM

### 9. Other Benefits or Amenities

Any other benefit/amenity/service/right/privilege → valued at the cost to the employer under an arm's-length transaction.
Telephone facility (incl. mobile) paid/reimbursed by employer → NOT taxable (exempt).
⚠️ But a telephone allowance (cash) is fully taxable.

General rule: Any amount recovered from the employee reduces the perquisite value across all sub-rules.

Worked example

### Example 1

Transfer of computer: Employer bought a laptop for ₹80,000, used it for 2 completed years, then transferred it to the employee for ₹5,000. Rate 50% WDV.

Year 1 dep = 50% × 80,000 = 40,000 → WDV 40,000. Year 2 dep = 50% × 40,000 = 20,000 → WDV = 20,000.

Perquisite = 20,000 − 5,000 recovered = ₹15,000.

### Example 2

Transfer of car: Employer's car cost ₹6,00,000, used 3 completed years, sold to employee for ₹1,00,000. Rate 20% WDV.

WDV after 3 yrs = 6,00,000 × 0.8 × 0.8 × 0.8 = ₹3,07,200.

Perquisite = 3,07,200 − 1,00,000 = ₹2,07,200.

### Example 3

Use of asset (other): Employer-owned music system costing ₹50,000 given for the employee's use for the full year.

Perquisite = 10% × 50,000 = ₹5,000.

⚠️ Common exam mistakes

Using the wrong depreciation method — computers/cars use WDV, other assets use SLM.
Counting part years — depreciation applies only for completed years of usage.
Taxing the use of a laptop/computer — its value is Nil.
Confusing telephone reimbursement (exempt) with telephone allowance (fully taxable).
Forgetting to reduce the amount recovered from the employee.

Reference: Rule 3(7) — Income-tax Rules, 1962

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →