Perquisites are the most common form of non cash or cash method through which employer try’s to compensate this employees i.e. benefit other than basic salary and dearness allowances. Perquisites are defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. Perquisites can fall is three categories Taxable for all employees, Taxable for specified category of employees and Exempted for all employees.
Condition for taxability of perquisites.i.e. Perquisites are taxable and included in gross salary only if they are
- Allowed by an employer to an employee,
- Allowed during the continuation of employment,
- Directly dependent on service,
- Resulting in the nature of personal advantage to the employee and
- Derived by virtue of employer’s authority.
- Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee.
List of Perquisite which are taxable under income tax act Taxable for all categories of employee:
- Rent Free Accommodation furnished or unfurnished
- Concession in rent
- Obligation of the employee met by employer
- Salary to Gardner / watchman / sweeper or a personal attendant appointed by employer paid by employer
- Gas, electricity, water or household consumption if connection is in the name of employer and bills are paid by employer
- Education facility to the member of employees household if bill are issued in the name of employer and paid by employer
- Amount payable directly or indirectly to effect an assurance on the life or an annuity (not being RPF etc.)
- Notified fringe benefit
- Interest free or concessional loan
- Use of movable assets by employee or member of his household (other than laptop and computer)
- Transfer of movable assets to employee or member of his household
- Any medical facility to employee or member of his household other than
- Hospital maintained by the employer
- Hospital maintained by the Government or any local authority or approved by the Government for medical treatment of Government employee
- In respect of prescribed diseases or ailments, in any hospital approved by the Chief commissioner
- Health insurance premium under any scheme of central government (2007-2008 A.Y.)
- And bill in the name of employee and paid or reimbursed by employer (in excess of Rs.15000 per A.Y)
Perquisites Taxable for specified employee:
Following are also taxable
- Salary to Gardner / watchman / sweeper or a personal attendant appointed by employer paid by employer
- Gas, electricity, water or household consumption if connection is in the name of employer and bills are paid by employer
- Education facility to the member of employees household if bill are issued in the name of employer and paid by employer
- Any medical facility to the employee or member of his household other than
- Hospital maintained by the employer
- Hospital maintained by the Government or any local authority or approved by the Government for medical treatment of Government employee.
- In respect of prescribed diseases or ailments, in any hospital approved by the Chief commissioner
- Health insurance premium under any scheme of central government (2007-2008 A.Y.)
- And bill in the name of employee and paid or reimbursed by employer (in excess of Rs.15000 per A.Y)
List of Tax Free perquisites is given below:
- Medical facility or reimbursement
- Refresher courses
- Shares under ESOP/ESOS
- Free telephone and mobile facility (FBT)
- Tax on non-monetary perquisite paid by employer
- Free use of laptop/computer
- Leave travel concession
- Food and beverages provided to employees
- Facilities in general
Reference: – As Per Section 17(2) (iv) Of the Income Tax Act 1961
As per Section 17 (2) of the Act, perquisites include:
1. Value of rent free accommodation provided to the employee by the employer.
2. Value of concession in the matter of rent in respect of accommodation provided to the employee by his employer.
3. Value of any benefit or amenity granted free of cost or at a concessional rate in any of the following cases:
a) By a company to an employee who is a director thereof
b) By a company to an employee who has substantial interest in the company
c) By any employer to an employee who is neither a director, nor has substantial interest in the company, but his monetary emoluments under the head ‘Salaries’ exceeds Rs.50,000
4. Any sum paid by the employer towards any obligation of the employee.
5. Any sum payable by employer to affect an assurance on the life of Assessee.
6. The value of any other fringe benefit given to the employee as may be prescribed.