There are different assets which are given by the employer to the employee during the course of the employment to its employees so that it can fulfill his duties and once the work is completed employer has the option of transferring those assets to the employee at the lower cost. Since depreciated value of these asset is higher than what has been recovered from employee for such asset and from income tax perspective it is treated as perquisite and tax is payable on such additional value.
Valuations of these assets are done according to their tenure of use by the company. For Computer and electronic items depreciation of 50% is to be provided for each completed years means 1 year from the day of purchase and value of asset is reduced by 50%. I.e. Cost of asset is Rs 100/- after one year value is reduced by Rs 50/- and at the end of second year it will be reduced by Rs 25/- and at the end of third year it is reduced by Rs 12.5/- and value at the end of third year will be Rs 12.5/- for that asset for calculation of perquisites.
For Motor Car it will be 20% rate WDV (Written Down Value Method) and for any other asset it will 10% SLM (Straight Line Method).
Reference:
As Per Section 17(2)(viii) & Rule 3(7)(viii), Of the Income Tax Act, 1961-
Rule 3.
For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules,—
(7) In terms of provisions contained in sub-clause (viii) of clause (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:
(viii) The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his household shall be determined to be the amount representing the actual cost of such assets to the employer as reduced by the cost of normal wear and tear calculated at the rate of 10 per cent of such cost for each completed year during which such asset was put to use by the employer and as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer :
Provided that in the case of computers and electronic items, the normal wear and tear would be calculated at the rate of 50 per cent and in the case of motor cars at the rate of 20 per cent by the reducing balance method.