Yes, it is true that a staff availing loan from own bank under staff loan facility un concessional interest rate needs to pay tax on the differential interest amount over the normal rate because such concession is a result of his employment at the bank. As per section 27(1)(d) of income tax act, 2058 in case the interest paid by the payee in an income year under a loan happens to be less than the interest payable according to the standard interest rate, the amount of shortfall shall be included as income for income tax purposes. Prevailing interest rate means interest rate available in market according to nature of loan provided. For this purpose, it is the responsibility of the tax payer to declare and justify the interest rate.
- This reply was modified 1 year ago by Tax Talk.