A perquisite refers to any form of non-cash remuneration made available by an employer to an employee. In other words, any non-cash consideration paid by an employer to the employee is considered to be a perquisite. … However, some types of perquisites are tax-free in the hands of the employee.
What do you mean by perquisites?
“Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. In essence, these are usually non-cash benefits given by an employer to employees in addition to cash salary or wages.
What are tax-free perquisites in income tax?
As is the case with allowances, the effect of perquisites on salary income largely depends on the type of perquisites that you receive. While there are tax-free perquisites such as rent free accommodation, supply or water or gas, taxable perquisites include education for children, domestic help’s service etc.
What is tax on perquisites?
The rate at which perquisites are taxed is 30% of the value of fringe benefits. The perquisite tax is paid by the employer who furnishes these fringe benefits to employees. It can be a company, a firm, an association of persons or body of individuals.
What are perquisites examples?
Perquisites are emoluments or benefits received from an employer, in addition to salary. For example, Rent-free accommodation. … 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 is perquisites and its types?
Perquisite is defined as a privileged gain or profit incidental to regular salary. Perquisites are both taxable and exempt. Perquisites can be simple as company car, fuel reimbursement etc. or may also include interest-free loan, medical facilities, credit cards, accommodation sponsored by the company, etc.
Is perquisites part of salary?
Perquisites are included in salary income only if they are received by an employee from his employer (maybe former, present or prospective). Perquisites, received from a person other than employer, are taxable under the head “Profits and gains of business or profession” or “Income from other sources”.
How are perquisites treated for income tax purposes?
As per the provisions of the income tax act, perquisite includes: The value of rent-free accommodation/concessional rent accommodation provided to the employee by his employer. The value of any benefit or amenity granted or provided free of cost or at concessional rate in certain specified cases.
Are car perquisites taxable?
A car provided by an employer to an employee is a taxable perk if the latter’s salary is more than Rs 50,000 a month. The value of the perquisite depends on the cubic capacity of the engine and whether the employer or employee pays for the car’s maintenance and running cost.
Is all perquisites are taxable?
The Finance Act, 2005 states – Perquisites will be taxed by the government when such benefits have been provided or are considered to have been provided to employees by employers. Ideally, perquisites are taxed at the rate of 30% of the entire value of the availed fringe benefits.
What are the different types of tax free perquisites?
List of Tax-Free Perquisites – Income Tax Act
- Medical Facilities & Reimbursements. …
- Recreational Facilities. …
- Traininghttps://www.indiafilings.com/learn/tax-free-perquisites/ …
- Telephone & Laptops. …
- Education for Children. …
- Food and Beverage. …
- Loan to Employees. …
- Insurance Premium & Pension Contributions.
How is perquisite tax calculated?
Value of perquisites as calculated in case of unfurnished accommodation shall be increased by 10% p.a. cost of furniture or actual rent of furniture minus amount paid by employee. Rent paid by the employer or 15% of salary (whichever is lower) minus rent paid by employer.
How many types of perquisites are there?
Types of perquisites
Rent-free/concessional rent accommodation provided by the employer. Any amount paid by the employer in respect of an obligation that was actually payable by the assessee. Value of any benefit/amenity granted free or at a concessional rate to specified employees.
What are the characteristics of perquisites?
Perquisites have the following characteristics: Perquisites can be received regularly or casually; Perquisites can be received in cash or in kind and if in kind, it must have money’s worth and are convertible into money.