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In the explanatory Circular No. 15/2001 dated 12.12.2001issued by the Central Board of Direct Taxes it is explained that credit card subscriptions would be chargeable to tax as a perquisite. Similar principle is suggested for annual and periodical club subscriptions when such facilities are used both for official and personal purposes. In an exception note the two relevant clauses in rule 3 dealing with these two heads specifically provide that there shall be no value of such benefit where the expenses are incurred wholly and exclusively for official purposes. Unlike section 10(14) the two clauses do not include the word “necessarily” meaning thereby that such expenditure may confer some indirect benefit to the employee, which may be ignored. Under clause (14) of section 10 the word” necessarily” is a clear pointer to the fact that no exemption is possible if any benefit, howsoever small it may be, is conferred on the employee. In other words in the absence of such word in the new clauses (v) & (vi) of sub-rule (7) of rule 3 it is not desirable to consider any value of perquisite or benefit arising to an employee for payment/reimbursement of any credit card /club membership subscription provided there is definite usage of such facility for official purpose during the previous year.

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