What is perquisites in income tax?

Just like how every business house and income-generating individual is liable to pay income tax, some perquisites or fringe benefits are attached to every earning individual. Some of the most popular examples of perks or perquisites offered to their employees by employers are the provision of official vehicles, housing allowance, Provision of medical facilities, etc. Let’s read about what is perquisites in income tax in detail:

Perquisites are privileged gains or profits related to regular salary. Perquisites are both exempt and taxable. They could be simple as fuel reimbursement, company car, etc., or might also include employer-sponsored accommodation, interest-free loans, credit cards,  etc.

This type of perquisites includes the service of a domestic servant, an education facility for children, car owned by the company but used by an employee, etc.

These perquisites include gym facilities, gifts exceeding Rs. 5000, club, salary of servant employed by the employee, reimbursement of medical expenses, professional tax of employee, supply of electricity, water, and gas, rent-free accommodation,  free meals, etc.

Non-taxable fringe benefits include free medical and recreational facilities, contribution to the provident fund by employers, interest-free salary loan offered to the employee by the employer, telephone lines, sports club, health club, provision of medical aid, refreshment offered by the employer during office hours, computer or laptop provided by the company for official use, travel allowance, and so on.

I hope now you like my answer on the meaning of perquisites in income tax.

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Perquisite

definition in income tax

referred to as "perks,". These are benefits or amenities provided by an employer to employees in addition to their regular salary or wages.

Some common examples of perquisites include:

If an employer provides accommodation to an employee either rent-free or at a concessional rate, the taxable value of the accommodation is considered a perquisite.

Any allowance provided to you for commuting between the place of residence and the place of work is considered a perquisite.

Provision of utilities such as electricity, water, and gas, as well as amenities like free or concessional use of a car, club membership, etc., are treated as perquisites.

If an employer provides loans to employees at an interest rate lower than the prescribed rate, the difference between the prescribed rate and the actual rate charged is considered a perquisite.

The benefits derived by an employee from stock options are considered perquisites.

Gifts or vouchers provided by the employer to employees on special occasions are considered perquisites.

If an employer provides education facilities for the children of employees, the value of such facilities is treated as a perquisite.

This is the

perquisite definition in income tax.

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Hi there Malini,

I think Sanjana has explained perquisites in Income tax quite well. When I was asked in my tax class to define prerequisites in Income tax, I stated the same things as her. I explained the types of perquisites in taxation just like her. But my professor asked me to add a few things to it which I got reminded of when I stumbled upon your question. 

I would like to share some more information which will further help you know more about perquisites in Income Tax.

Some of the most common perquisites provided by companies include accommodation, and cars. I am going to share tax rates on the same:

You should know that things like HRA are considered as an allowance and not perquisites but you can still save taxes on it by submitting a rent agreement copy and rent receipts.

I hope this helps you know this subject better.

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