AIUCBEF Requests 100% Absorption of Income Tax on Concessional Staff Loans
Date: 16 July 2026
The All India UCO Bank Employees’ Federation (AIUCBEF) has formally represented to the Managing Director and Chief Executive Officer of UCO Bank, requesting the complete absorption of the Income Tax liability on non-monetary perquisites arising from concessional and interest-free staff loans. Following a recent Supreme Court judgment, the perquisite value from these loans became taxable, which has led to substantial TDS deductions and a sharp reduction in employees’ monthly take-home pay, causing financial distress. The Federation has pointed out that multiple prominent Public Sector Banks have already resolved to bear this tax on behalf of their employees.
Key issues raised:
– The Department of Financial Services (DFS) has empowered the Boards of Public Sector Banks to independently decide on the absorption of this tax liability.
– Major banks, including State Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Union Bank of India, and most recently Indian Bank, have already implemented 100% absorption of this tax.
– The Income Tax Act, 1961, explicitly permits employers to bear the tax on non-monetary perquisites under Section 192(1A). Furthermore, Section 10(10CC) ensures this tax payment by the employer is not treated as an additional taxable perquisite for the employee. – AIUCBEF urges UCO Bank management to present this proposal to the Board of Directors for prompt approval, viewing it as a critical welfare measure.
– The union highlights the bank’s robust financial position and states that extending this relief would significantly improve workforce morale and organisational commitment.
Full Letter Text
ALL INDIA UCO BANK EMPLOYEES FEDERATION (AFFILIATED TO AIBEA) REG. NO. 3489/CNI 10, BTM SARANI, 2nd Floor, KOLKATA – 700001
REGD OFFICE : CHENNAI(UCO Bank, 328, Thambu Chetty Street,
Chennai-600001) Email ID : AIUCBEF.IN@GMAIL.COM /
STAFFUNIONWB@GMAIL.COM Mob No. 9830018941/7003608652
Ref No. AIUCBEF/MD &CEO /158/23- 26
Dated 16/07/2026
To
The Managing Director & Chief Executive Officer (I/C) UCO Bank Head Office, Kolkata
Dear Sir,
Sub: Request for 100% absorption of Income Tax liability on
non-monetary perquisites arising from concessional and interest-free staff loans
On behalf of the All India UCO Bank Employees’ Federation (AIUCBEF), we submit this representation seeking the Bank’s kind consideration for 100% absorption of the Income Tax liability on non-monetary perquisites arising from concessional and interest-free staff loans extended to employees.
Pursuant to the judgment of the Hon’ble Supreme Court, the perquisite value arising from concessional and interest-free staff loans has become taxable for the employees. Consequently, the deduction of Income Tax at Source (TDS) on such perquisites has resulted in a substantial reduction in the monthly take-home salary of many employees, imposing an unexpected financial burden and causing considerable hardship across all cadres.
We respectfully submit that the Department of Financial Services (DFS) has empowered the Boards of Public Sector Banks to take an independent decision on whether the Bank should bear the tax liability on such non-monetary perquisites. Exercising this discretion, several Public Sector Banks have already adopted a progressive and employee-friendly approach by approving 100% absorption of the tax liability on behalf of their employees.
In this regard, State Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank and Union Bank of India have already implemented full absorption of the Income Tax liability on these perquisites. Most recently, Indian Bank, through its Corporate Office HRM Department Circular No. 24282 (MAIN: HRMD-29/2026-27, SUB: HRD-28) dated 15th July, 2026, has also obtained the approval of its Board of Directors for 100% absorption of the perquisite tax relating to Staff Housing Loans, Vehicle Loans, Education Loans and Interest-Free Loans/Advances for the financial year 2026-27.
The employees of UCO Bank have consistently demonstrated unwavering commitment, dedication and professionalism in contributing to the Bank’s sustained business growth, improved operational efficiency and enhanced profitability. Their relentless efforts have played a significant role in strengthening the Bank’s overall performance. We, therefore, earnestly believe that they deserve similar support and consideration from the Management, particularly when comparable Public Sector Banks have already extended this welfare measure to their employees.
We also wish to draw your kind attention to the relevant provisions of the Income Tax Act, 1961. Under Section 192(1A), an employer is expressly permitted to bear the Income Tax liability on non-monetary perquisites provided to employees. Furthermore, Section 10(10CC) clearly stipulates that the tax so paid by the employer shall not be treated as an additional taxable perquisite in the hands of the employee. Thus, there exists a clear statutory framework enabling the Bank to absorb this liability without creating any additional tax implication for its employees.
Considering the Bank’s sound financial position and the comparatively modest financial implication involved, we earnestly request the Management to place this matter before the Board of Directors at the earliest and obtain approval for 100% absorption of the Income Tax liability on non-monetary perquisites arising from concessional and interest-free staff loans for all eligible employees.
Such a compassionate and employee-centric decision would provide meaningful financial relief to employees, enhance morale, strengthen organisational commitment, improve productivity and further reinforce UCO Bank’s image as a caring, progressive and responsible Public Sector Bank that values the welfare of its workforce.
We would also like to respectfully submit that all other unions of our bank have on several occasions urged the management for consideration of the same.
In view of the foregoing, we humbly request your kind intervention and solicit an early and favourable decision in the larger interest of the employees and the organisation.
We shall remain grateful for your sympathetic and positive consideration.
Thanking you.
Yours faithfully,
Partha Chanda (General Secretary)
Copy To :
1. Executive Director-II (UCO Bank)
2. The Chief General Manager (HRM, PSD, OL & Training)(UCO Bank)
doc_d869abac3fd6_AIUCBEF_Ltr_to_MD_and_CEO_158-1_260717_175243.pdf