PERQUISITES: (Sec.
17 (2)):
"Perquisite" is a gain or profit from employment in addition to salary or wages.
The following are the classification of Perquisites:
a. The value of rent free accommodation provided by the employer to the assessee.
b. Value of any concession in rent for any accommodation provided by the employer.
c. Value of any amenity or benefit granted free of cost or at a concessional rate in any of the following cases:
i. by a company to an employee who is the Director.
ii. by a Company to an employee who has substantial interest in Company (an employee who is the beneficial owner of at
least 20% of the ordinary shares).
iii. by an employer to an employee to whom the above 2 points do not apply and whose income under "Salaries" exceed a
prescribed limit.
If salary is received from more than one employer, the aggregate salary is taken into account.
d. Any sum paid by the employer which should have been payable by the assessee.
e. Sum payable by employer directly or through a fund for life insurance of the assessee.
f. The value of any other fringe benefit or amenity as may be prescribed.
PERQUISITES EXEMPTED FROM TAX: (TAX FREE PERQUISITES)
1. Refreshment provided during working hours.
2. Lunch or dinner provided to the employees.
3. Privilege passes and privilege tickets granted by Railways to its employees.
4. Recreational facilities provided to a group of employees.
5. Amount spent on training of employees or fees paid for refresher management courses.
6. Goods sold at concession to employees.
7. Telephone provided as residence of an employee.
8. Transport provided by employer engaged in business. of carriage of goods to his employees at concessional rate of free
of charge.
9. Perquisites allowed by the Government outside India for rendering services outside India.
VALUATION OF PERQUISITES:
For valuation of perquisites in respect of rent free residence, or accommodation provided at concessional rate, motor car,
supply of gas, electric energy, free education, free or concessional journey, domestic servants, shares issued at discount,
leave travel concession in India and to foreign nationals, etc, rules are provided under the Income Tax Act.
Other fringe benefits provided include:
1. Interest free or concessional loan.
2. the value of traveling, touring, accommodation and any other expenses paid for or borne or reimbursed by the
employer for any holiday availed of by the employee or his family
3. Free meals provided by the employer to an employee
4. value of any gift, voucher or token which is received by the employee on ceremonial occasions
5. Membership fees and annual fees incurred by the employee or any household member
6. Club expenditure or fees incurred by the employee which the employer shall reimburse
7. the value of any benefit from the use of any movable asset of the employer by the employee.
8. the value of benefit from the transfer of any movable asset belonging to the employer directly or indirectly to the
employee.
The following are not perquisites:
a. Value of medical treatment given to the employee or any of his family members in any hospital maintained by the
employer.
b. Amount paid by the employer for any medical expenses incurred by the employee for himself or his family member in
any Government hospital or any hospital approved by the Government for the purposes of medical treatment of its
employer and for prescribed ailments in any hospital approved by the Chief Commissioner as to the prescribed guidelines.
In this case, the employee should attach a certificate from the hospital specifying the disease or ailment for which he was
treated with the charge along with his return of income.
c. Any portion of premium paid by an employer for an employee to effect a health insurance scheme approved by the
Central Government for purposes of deduction from business income (Clause (ih of sub section (1) of Sec. 36)
d. Any sum paid by the employer for premium paid by the employee towards health insurance of himself or his family
members under any scheme approved by the Central Government for purpose of deductions towards medical insurance
premium. (deduction to be made in computing total income under Sec. 80D).
e. Any sum. paid by the employer in respect of any expenditure incurred by the employee on his medical treatment or
that of any of his family members other than that in point No. A & B, and such amount should not exceed Rs. 15000 / in
the previous year.
f. Any expense incurred by the employer on medical treatment of the employee or his family member outside India,
travel and stay of the employee or his family member abroad for medical treatment, and travel and stay of one attendant
accompanying the patient for such treatment.
Such amount will be excluded from perquisite upto the extent permitted by the Reserve Bank of India and only in case of
an employee whose gross total income before including the said expenses is not above Rs. 2 ,00,000/-.
g. Any expense mentioned in the above point incurred by the employee for the above purposes subject to the specified
conditions.
