PERQUSITES [SEC.17 (1)]

Perquisites are special benefits or amenities provided in kind by the employer at free of cost or at a concessional rate and it is added to the income of employees. There are various perquisites get exemption according to Specified employees or not. They are,

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1. Educational facility

Employer provide educational facility in his own Institution, then specified employees and others enjoying exemption, otherwise it is taxable in specified employees only

2. Free gas, light, water

If those facilities supplied by the employer, taxable in the hands of specified employees. Otherwise if the facilities owned by the employees then it is taxable in the hands of both employees whether specified or not

3. Free servants

If the expense met by the employer, then it is taxable in the case of specified employees or if it met by the employees themselves then it is taxable in the hands of non specified employees also

4. Free meals

Exempted to both the employees whether specified or not

5. Gift in kind

Exempted to both the employees whether specified or not

6. Transfer of movable Asset

Taxable from both the hands

7. Use of movable Asset

Taxable from both the hands

8. Facility of club or heath club

Exempted from both the hands

9. Telephone

Exempted from both the hands

10. Motor car

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If it is owned by the employer, exempted or if it is owned by the employee then taxable in the hands of both the employees

11. Interest free or Concessional loans→

If it provided by the employer to his employees, exempted up to Rs.20000/- same as it is for medical treatment for diseases like CANCER, AIDS etc also will get exemption.

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**Perquisites value of Rent free Accommodation**

For calculating perquisites value of rent free residential accommodation, salary include,

Salary = Basic pay+ DA+ Bonus+Commission+fees+ Taxable allowances, Besides, employees can be classified in to two categories for this purpose. They are,

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1. Accommodation is provided by Union or State government.

Here the license fee determined by the Union or State Govt less the actual rent paid by the employees, where the accommodation is unfurnished.

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2. Accommodation is provided by any other employer other than Govt employer (other sector employees)

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a) Where the accommodation owned by the employer (unfurnished accommodation)

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1).7.5% of salary (Population 10 lacs and below)
2) 10% of salary (Population in between 10 lacs and 25 lacs)
3)15% of salary (Population more than 25 lacs)
From the calculated amount deduct the rent paid by the employees

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b)Accommodation taken on lease or on rent by the employer

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1. Actual amount of lease or rent paid or payable by the employer or
2. 15% of salary, which ever is less

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Accommodation furnished → where the rent free accommodation is a furnished one then 10% per annum of the cost of the furniture adding with the perquisites value of rent free accommodation.