Oilcos to bear housing perk tax

NEW DELHI: In a move that may set an example for other public sector undertakings, oilcos such as IOC, HPCL and BPCL have decided to absorb the housing tax on behalf of their staff for company accommodation. The decision, which will come as a relief to the employees of these PSUs, is expected to be implemented retrospectively by at least some of them.

“A consensus has been arrived at among the directors (HR) of all the three companies to bear the total perquisite tax on company-owned and third party company-leased accommodation (excluding self-leased) on behalf of the employees from 2007-08 onwards as permissible under Section 10 (10CC) of the Income-Tax Act,” according to an official source.

To avoid defaults in paying taxes, some oilcos have already paid the tax to the Centre on behalf of their employees. “It is, therefore, recommended that the absorption of perquisite tax may be given effect from 2006-07 onwards to avoid recovery from staff,” a BPCL official said. The move would cost BPCL Rs 5 crore annually. It is understood that HPCL has also agreed to implement it retrospectively.

Companies consider it a win-win situation. Taxing employees for housing perquisite would lead to employees opting for housing rent allowance (HRA) instead of company accommodation. This could jack up companies’ outflow to double of what they would cough up if they paid the housing tax on behalf of their staff.

Giving the rationale behind the proposed move, the BPCL official said: “Keeping in view the current realities of the job market and the difficulty in retaining talent, it will be prudent that the corporation absorbs the cost of perquisite tax with respect to company-provided accommodation.”

But the Oil Sector Officers’ Association (OSOA) is not happy with the move. “This would dilute our case. We want reimbursement of all perquisites and not just housing. Besides, we want these benefits to reach all officers of public sector oil companies and not just three OMCs,” OSOA convenor Ashok Singh said. There are over 45,000 officers working in public sector oil companies, including ONGC, OIL, IOC, HPCL, BPCL, GAIL, CPCL and EIL.