Holiday availed by the employees or any member of the household of employee’s are taxable in their hand to the extent of such expenditures that are reimbursed by the employer.
Holiday expenses will also include traveling, touring and stay expenses. Any amount reimbursed by the employer as leave travel allowance will not be covered in this case i.e. LTA or LTC will be allowed as an exemption to the extent provided under section 10(5) of income tax act.
Holiday package available uniformly
If holiday package facility is available to all employees uniformly then balance amount as reimbursed by employer will be taxable as perquisite in the hands of employee (i.e. expenditure incurred by the employer – amount recovered from employee).
Holiday Package not available uniformly
If such facilities are maintained by the employer and not available uniformly to all employees then the value of perquisite will be considered to be the value at which such facilities are provided by other agencies to the public. From such value the amount recovered from employees will be deducted to arrive at the value of perquisite.
Other relevant points
- Where the employee is in official tour and the expenses are incurred in respect of any member of his household accompanying him/her, the amount of expenditure so incurred shall also be a fringe benefit or amenity and as such will be taxable in the hands of employee.
- If any official tour has been extended as a vacation, then the amount incurred for such extended stay of vacation will be treated as value of perquisite and taxable in the hands of employee.
- Holiday package reimbursed to an employee for the travel, tour, stay and other expenses incurred by any member of the employee’s household is also covered.