Perquisites 17(2)
“Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. These benefits may be provided either voluntarily or under service contract. Usually benefits received in kind are treated a perquisites and those received in cash are treated as allowances for income tax purpose. However, it may also include cases where the employer reimburses expenses or pays for obligations incurred by the employee.
Perquisites and their brief description is given below
Residential accommodation
| Situation | Perquisite value | |
| 1.)Government employee | Amount determined as per government rules+10 % of cost of furniture(if furnished)or hire charges (if any)
less amount paid or payable by employee(if any) |
|
| 2.1)Other employee(accommodation owned by employer)
|
a)cities having population exceeding 25 lakh as per 2001 census | 15 % of salary |
| b)cities having population exceeding 10 lakh but not more than 25 lakh as per 2001 census | 10 % of salary | |
| c)Other places | 7.5 % of salary | |
| 2.2)Other employee(accommodation taken on lease by employer) | Value computed under 2.1 (a, b or c)+10 % of cost of furniture(if furnished)or hire charges(if any)
less amount paid or payable by employee(if any) |
|
Motor car
| Situation | Perquisite value | ||
| Car owned by employer | Used for official purpose | Nil | |
| Used for personal purpose | Expenditure incurred on running & maintenance+Remuneration paid to driver(if any)+
Depreciation @ 10 % P.A on the actual cost of motor car Less amount charged from employee(if any) |
||
| Car taken on lease | Used for personal purpose | Expenditure incurred on running & maintenance+Remuneration paid to driver(if any)
Less amount charged from employee(if any)
|
|
| Car owned or hired by employer | Used for both official and personal purpose | Small car (CC less than 1.6 litre) | Large car (CC more than 1.6 litre) |
| Entire expenses of motor car is borne by employer | Rs 1,800 P.M | Rs 2,400 P.M | |
| Entire expenses of motor car is borne by employee | Rs 600 P.M | Rs 900 P.M | |
| If driver is also provided | Rs 900 P.M | ||
Facility of sweeper, gardener, watchman, personal attendant, gas, electricity, water
Value of such perquisite will be difference between the salary or amount paid by employer for such service and amount recovered from employee, if any
Educational facility
Education facility provided to the children of the employee in an institution owned and maintained by the employer and the cost of education per child exceeds 1,000 P.M then cost of such perquisites will be the difference between the cost of such education in a similar institution and any amount recovered from employee. If education facility is provided in any other institution the value of such facility will be the actual expenditure incurred by the employer.
Transport facility
If a transportation company provides to any employee with or without his family any private journey in free of cost or concessional charge then cost of such facility will be the difference between the cost of such transportation charged from the public and any amount recovered from employee, if any.
Transport facility given to employees of Airline and Railways cost of such facilities will be exempt
Interest free or concessional loan
If Aggregate amount of loan given to employee does not exceed rs 20,000, then value of such facility will be NIL
If loan is given for medical treatment of prescribed diseases in rule 3A (cancer, AIDS, etc.) then value of such facility will be NIL
If loan is given not under the situations mentioned above, then value of such perquisites will be the amount computed in accordance with the rate of interest charged P.A by SBI
Holiday enjoyment
Value of such facility will be the difference between the expenditure incurred by employer and any amount recovered from employee, if any.
Gift
Gifts given to employees on social and religious occasions will be exempt up to rs 5,000 will be exempt and the remaining value will be taxable
Gifts made in cash or convertible to cash or gift/gift voucher given on ceremonial occasions will be wholly taxable
Club expenses
Any expenditure incurred by employer on behalf of employee wholly and exclusively for the purpose of business- Value of such perquisites will be nil.
Employer provides such facilities uniformly to all employees- Value of such perquisites will be nil.
On other situations difference between total amount of expenditure incurred by employer and amount recovered by employee if any, will be the taxable amount of such perquisite.
Use of movable asset
If the employer provides use of any movable asset then 10 % of actual cost of such asset will be the perquisite value
If the asset used more than 10 years, then perquisites value will be Nil
On any other case, difference between total amount of expenditure incurred by employer and amount recovered by employee if any, will be the taxable amount of such perquisite
Transfer of movable asset
Value of such perquisites will be the amount remaining after deducting from cost of asset,
depreciation at
50 % on WDV basis (for computer and electronic devices)
20 % on WDV basis (for Motor car)
10 % on SLM basis (for other movable asset)
And amount recovered from employee, if any.
Any other benefit
Difference between total amount of expenditure incurred by employer and amount recovered by employee if any, will be the value of such perquisites.
Tax free perquisites (Perquisites not taxable)
Following perquisites shall not be included in the salary income of an employee:
a) Medical benefits
- Value of treatment of employee and/or members of his family in hospital, clinics etc. maintained by employer
- Any sum paid or reimbursed by the employer in respect of expenditure incurred by employee on payment as insurance premium or on expenditure incurred on medical treatment for self or for his family in any government hospital or hospitals approved by chief commissioner.
- Reimbursement of medical expenses incurred by the employee or for his family in a private hospital up to a maximum of rs 15,000 is not taxable
- Expenditure incurred in relation to medical treatment outside India – amount approved by RBI
b) Refreshment
- Value of refreshment provided during official hours
- Free meals provided during working hours in remote area/offshore unit
- Free meals provided during working hours in other places for a value up to rs 50
c) Recreational facilities
d) Telephone facility
e) Refresher course
f) Perquisites to government employees posted abroad
g) Interest free or concessional loan up to a maximum of rs 20,000
h) Laptops and computers provided for personal use of employee and/or his family
i) Etc….