Perquisites are the small benefits provided by the employers in addition to the normal salary at a free of cost or concession rates. Perquisites are taxable in the hands of employees. However, they are rules for valuation perquisites.
What is Perquisite and how it is taxed?
Perquisites are emoluments or benefits received from an employer, in addition to salary.
For example,
- Rent-free accommodation
- Free electricity, gas and water supply
- Free domestic servant provided/paid for by the employer
- Amount payable by an employer directly or indirectly to affect an assurance on the life of the employee or to effect a contract for an annuity, other than payment made to recognized provident fund etc.
- Amount paid by an employer in respect of any obligation which otherwise would have been payable by the employee, for example – payment of income-tax.
What are allowances?
An allowance is defined as a fixed amount of money given periodically in addition to the salary for the purpose of meeting some specific requirements connected with the service rendered by the employee or by way of compensation for some unusual conditions of employment. It is taxable on due/accrued basis whether it is paid in addition to the salary or in lieu thereon.
