## Salary TDS — Treatment of Tax on Non-Monetary Perquisites

### Key Provision (Section 192(1A))

When the employer voluntarily pays the tax on non-monetary perquisites provided to an employee (e.g., rent-free accommodation, car, etc.):

→ The tax so paid by the employer is REDUCED from the total TDS to be deducted from the employee's salary.

### Reasoning

If the employer is bearing the perq tax separately, then to avoid double-counting, that amount is netted off from the salary TDS.

### Formula

```

TDS to be deducted from Salary

= Total Tax Liability on Salary − Tax paid by Employer on Non-Monetary Perqs

```

Worked example

### Example 1

Example:

Item	Amount (₹)
Total tax on salary (including perqs)	89,000
Tax paid by employer on non-monetary perqs	(12,500)
TDS to be deducted from salary	76,500

The employer pays ₹12,500 separately to the government (own pocket) for the non-monetary perq tax, and deducts only ₹76,500 from the employee's salary.

⚠️ Common exam mistakes

Deducting full tax liability from employee's salary without netting off the perq tax already borne by employer.
Treating tax paid on monetary perquisites the same as non-monetary — only non-monetary perq tax borne by employer enjoys this treatment.
Forgetting that the tax borne by the employer is itself NOT a taxable perquisite in the employee's hands (under Section 10(10CC)).

Bare-Act text Section 192(1A) read with Section 10(10CC) · Income-tax Act, 1961 · click to expand

If Tax on Non-monetary perquisites is paid by Employer, It is deducted while calculating TDS on Salary of Employee. Eg: Total Tax on Salary = 89000; Tax Paid on Non-monetary Perqs by Employer = (12500); TDS to be Deducted from Salary = 76,500.

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TDS on Salary - Non-monetary Perquisites Paid by Employer

Worked example

⚠️ Common exam mistakes