What is Perquisites And its Taxability
TAXABILITY OF PERQUISITES
Ø Meaning of Perquisite:
In simple words,
perquisites are the benefits or facilities provided
by an employer to his employee in addition to the
normal salary.
Ø List of Perquisites:
A.
CATEGORY 1 - PERQUISITES TAXABLE U/5 17(2):
Ø Rent free accommodation- Section 17(2)(i) &
Rule 3(1)
Ø Accommodation at concessional rent- Section 17(2)(ii) & Rule 3(1)
Ø Perquisites taxable in case of .specified employees only- Section 17(2)(iii) & Rules 3(2) to 3(6)
Ø Any obligation of the employee discharged/met, by the employer- Section 17(2)(iv)
Ø Payment of life
insurance premium by the employer
on behalf of the employee
- Section 17(2)(v)
Ø
Specified securities or sweat equity
shares allotted/transferred by the employer
to his employees free of cost
or at concessional rates - Section 17(2)(vi)
Ø Employer's contribution to approved superannuation fund- Section 17(2)(vii)
Ø Any other fringe benefit- Section 17(2)(viii) & Rule 3(7)
A. CATEGORY 2 - OTHER PERQUISITES:
Ø Medical facility - Proviso to Section 17(2)
Ø Leave Travel Concession (LTC)/Leave Travel Assistance (LTA) - Section
10(5) & Rule
2B
RENT FREE ACCOMMODATION -
{Section 17(2)(i): Rule 3(1))
In Case of Government Employees
In case of rent-free accommodation provided by the Central Government or the State
Government to its employees,
perquisite value
shall be the license fee determined as per the rules framed
by the Government in this regard.
In Case of Non-Government Employees
Case 1- Accommodation is NOT OWNED by the Employer :
In case of accommodation taken on rent by the employer and given to the employee
free of rent, the taxable
value of perquisite shall be least
of the following:
• 15% of RFA salary
• Rent charges paid/payable by the employer
Case
2 – Accommodation is OWNED by the Employer :
•
In case of accommodation owned by the employer and given to the employee free of rent,
the taxable value
of perquisite
shall be as follows:
Note: Meaning
of RFA Salary:
|
RFA Salary Includes |
RFA Salary Excludes |
|
•
Basic Pay; •
Dearness Allowance/Pay (only to the
extent it forms part of salary
for retirements benefits); •
Taxable portion of all
Allowances; • Bonus/Commission/Fees, etc; •
Leave Salary received by the
employee during his employment. |
•
Taxable portion
of all Perquisites (whether monetary or non-monetary) •
Any payment at
the time of retirement or after retirement. Examples: Gratuity, commuted pension, provident fund, etc •
Arrears of salary; •
Advance salary. |
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