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Request to Absorb Perquisite Tax for Employees

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51 views2 pages

Request to Absorb Perquisite Tax for Employees

Jn

Uploaded by

ganesh.dsrao
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Ref. No.: CBOF/GS/BS/DEC 24/75 Date : 19.12.2024.

To
The Managing Director & CEO
Canara Bank
Head Office
Bengaluru

Dear Sir,

SUBJECT: REQUEST FOR ABSORPTION OF INCOME TAX ON PERQUISITES


OF EMPLOYEES

We are writing this letter to bring to your kind notice an issue that has been of a growing
concern among the employees i.e. the financial strain caused by the levy of Income Tax on
Perquisites extended by the Bank to its employees.

The Bank has been extending various perquisites to the employees based on their position such
as residential quarters facility (including leased accommodation), furniture for use at their
residence, loans at concessional rates of interest, etc. While these facilities reduce the financial
burden, they do not add to their take home pay. But most of these perquisites are subject to
Income Tax in terms of Income Tax Act and this additional tax burden significantly impacts
employees’ disposable income, especially in the current economic scenario where inflation and
personal tax obligations continue to rise.

In this connection, we wish to bring to your kind notice that the peer banks like State Bank of
India (SBI) and Bank of Baroda have been absorbing the income tax on perquisites on behalf
of their employees. This proactive measure not only alleviates the tax burden but also serves
as a testament to the management’s commitment to the well-being of its workforce.

We believe that Canara Bank, being a premier institution with a longstanding tradition of
employee-centric initiatives, is well-positioned to implement a similar policy to absorb the
employees’ tax liability on perquisites.

Absorbing the tax on perquisite would:

1. Enhance Employee Morale: Employees will perceive this measure as a tangible


acknowledgment of their dedication and contribution to the Bank’s growth.

1
2. Align with Industry Leaders : By adopting this policy, Canara Bank would align itself
with industry leaders, reinforcing its reputation as an employer of choice.

3. Improve Workforce Productivity: Reducing the financial burden would allow


employees to focus more effectively on their professional responsibilities, thereby
contributing to the Bank’s overall efficiency and success.

4. Remove anomaly among the employees : Under Income Tax Act, for the purpose of
Income Tax , valuation of accommodation provided by the employer depends on
whether the employer owns the same or takes it on lease / rent. It has created an anomaly
between the two class of employees of the same grade, serving at the same place – one
provided with the bank owned accommodation and the other with leased / rented
accommodation, with no fault on their part. Absorption of income tax on perquisites
will remove this anomaly.

We respectfully urge the management to give due consideration to this proposal and initiate
the absorption of the perquisite tax liability. Such a decision would exemplify the Bank’s
progressive approach to employee welfare and further strengthen the trust and goodwill
between the workforce and the management.

We are confident that this appeal will be received with the thoughtful deliberation it merits,
and we look forward to your favorable response.

Thanking you.

Yours sincerely,

(BENNET SEBASTIAN)
GENERAL SECRETARY
CANARA BANK OFFICERS FEDERATION

Common questions

Powered by AI

Reducing the financial burden on employees by absorbing the income tax on perquisites would allow them to focus more effectively on their professional responsibilities, theoretically enhancing productivity and contributing to the bank’s overall efficiency and success .

Absorbing the income tax on employee perquisites could help align Canara Bank with industry leaders, reinforcing its reputation as an employer of choice. This move could improve its competitive position by demonstrating a commitment to employee well-being and modern HR practices .

The absorption could eliminate disparity caused by unequal tax treatment of employees receiving different types of accommodation (bank-owned vs leased). By leveling the tax impact, it removes systemic inequities, promoting fairness and equality among employees .

If Canara Bank does not absorb the tax, it may face dissatisfaction and decreased morale among employees, particularly when compared with other banks that have implemented such measures. This could lead to increased turnover, difficulty in attracting talent, and reputational harm in being perceived as less competitive in employee welfare .

The primary reasons include enhancing employee morale by acknowledging their dedication, aligning with industry leaders like SBI and Bank of Baroda which already absorb such taxes, improving workforce productivity by reducing financial strain, and removing the anomaly between different classes of employees due to varying tax valuations on bank-owned versus leased accommodations .

By absorbing the perquisite tax, employees perceive a tangible acknowledgment of their dedication, enhancing their morale. This act of understanding and support by the management is likely to increase loyalty and job satisfaction .

The Federation suggests a strategic approach of absorbing the tax to enhance employee welfare, a move consistent with the bank’s tradition of employee-centric initiatives. It demonstrates a commitment to improving employee conditions and aligning with industry leaders, reinforcing Canara Bank’s reputation as a progressive employer .

By absorbing perquisite tax, Canara Bank could distinguish itself as an empathetic and employee-focused employer, attracting and retaining top talent. This strategic move could position it competitively against banks that do not offer similar benefits, potentially improving employee retention and satisfaction .

The request highlights how rising inflation and personal tax obligations are impacting employees' disposable income. The additional tax burden on perquisites exacerbates financial strain, reflecting broader economic challenges that necessitate such measures for financial relief .

The inconsistencies arise from the Income Tax Act's valuation of accommodation, which varies based on whether the accommodation is bank-owned or leased, creating an anomaly within employees of the same grade. Absorbing the tax would eliminate this disparity, fostering equity among employees .

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