Employee Advances: Are They Taxable and What Are the Current Tax Rates?

Is an employee advance taxable? If yes, please provide the current tax rate.

I want to know the current rate for perk deduction tax (advance salary provided by the employer to the employee interest-free).

You need to provide more details. Taxation is a complex thing and it can't just be commented on in the abstract. Incidentally, for your information, the tax rate also differs depending on the individual, their income level, etc. Or perhaps you mean the rate of TDS?

An advance is basically an interest-free loan. Such loans of up to Rs 20,000 are exempt from tax. Any amount above it is taxable.

Thank you!

Under which rule is an advance of above ₹20,000 taxable? And under which rule is it exempt below ₹20,000?

Thank you.

Sir,

Please suggest whether section 185 and 186 of the Companies Act, 2013 are applicable to granting loans/advances to employees by companies.

Regards,
Vishal

I just checked with our accounts team. If the advance is repaid by the employee, it is not taxable. However, if it is deducted from the salary, it's taxable at the time when the advance was given. There are provisions in income tax that allow employees the benefit of choosing the lower of the differential tax rates (if any) in the case of advance or arrears. Therefore, you need to discuss with your auditor if the tax rates or the slabs change between the advance and the actual salary period.