Law: Income Tax Ordinance, 1979

Section: 16(2)(b)&24(i),24(1)

Law: Income Tax Rules, 1982

Section: 3,17,18

Income Tax Ordinance (XXXI of 1979)------Ss.16(2)(b) & 24(i)---Income Tax Rules, 1982, Rr.3, 17 ,& 18---C. B. R. Circular No. 10 of 1990, dated 4-12-1990-.--Perquisites---Expenditure incurred by assessee on the medical care of its employees falls within the definition of "perquisite" given under S.16(2)(b) of the Income Tax Ordinance, 1979 hence part of the expenditure envisaged under S.24(1) of the said Ordinance and admissible deduction.--- The provisions of law, relating to treatment of perquisites, allowances and other benefits, given by an employer to its employees, in the hands of employer, are different from the provisions of law relating to the treatment of such perquisites allowances and other benefits received by the employees from their employer, in the hands of the employee. While the provision of section, 24, clause (i) of the Income Tax Ordinance deals with extent to which the expenditure incurred by an employee for providing perquisites, allowances and other benefits to its employees is to be allowed as it's business expenditure, the provisions of section 16 of the Ordinance and Rules 3 to 18 of the Income Tax Rules, 1982 deal with the extent to which such perquisites, allowances and other benefits received by an employee are exempt from tax in the hands of the employee. However, the fact remains that expenditure incurred by the employer for providing, inter alia, the medical treatment to the employees and to, their entitled dependents is covered by the definition of perquisites. The terms 'perquisite', 'employer' and the "employee" have the same meaning, in each situation, as in subsection (2) of section 16. The exceptions to these meanings for the purposes of clause (i) of section 24 of the Ordinance are provided in Explanation (iii) to clause (i) supra and the C.B.R. Circular 16. Considering the fact that the medical expenses covered by Rule 17 of the Income Tax Rules, 1982 are envisaged as part of perquisite, allowances and benefits, there can be no controversy that in determining the amount of expenditure, in excess of 50% of the salary of employee under clause (i) of section 24 of the Ordinance, the expenditure incurred on medical…

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