Haryana Gramin Bank to Bear 100% TDS Liability on Interest-Free and Concessional Staff Loans
Haryana Gramin Bank has announced a new staff welfare measure regarding the tax liability on interest-free loans and loans provided to employees at concessional interest rates. The decision will apply for the financial year 2026-27.
The bank will bear 100% of the TDS liability on the perquisite value of interest-free loans and loans provided at concessional rates of interest to its officers and employees.
This means the bank will absorb the entire TDS liability arising from the taxable perquisite value of such staff loans for FY 2026-27.
Earlier the Bank Was Bearing 75% TDS Liability. Earlier, Haryana Gramin Bank had allowed absorption of 75% of the TDS liability on the perquisite value of interest-free and concessional-rate loans for FY 2025-26. The bank has now increased this benefit from 75% to 100% for the financial year 2026-27.
The Supreme Court ruled on 7 May 2024 that interest-free or concessional loans given by banks to their employees are a taxable perquisite. The tax benefit is calculated by comparing the staff loan interest rate with the applicable SBI lending rate. The Court also upheld the use of SBI’s rate as a uniform benchmark.
After the Supreme Court’s decision, all the banks stopped providing this facility to their employees.
