PERQUISITIES

Perquisites are the benefits or amenities in cash or in kind , or in money or money’s

worth and also amenities , which are not convertible into money provided by the
employer to the employer whether free of cost or at a concessional rate . their value
to the extent these go to reduce the expenditure that the employee normally would
have other wise incurred in obtaining these benefits and amenities is regarded as
part of the taxable salary .
Perquisites are taxable under the head salaries , A perquisites to be taxable under
the head salaries must fulfils the following conditions :
1) Perquisite must be provided by the employer directly or indirectly to the
employee .
2) Perquisite must directly be related with the employment .
3) Perquisite must have a legal origin .
4) Perquisite must have been given during the course of employment . if benefits
received after termination of the services are not perquisites .

TYPES OF PERQUISITIES

GENERAL PERQUISITIES

TAXABLE IN THE HANDS OF EVERY EMPLOYEE ASSESSEE

1) Rent free accommodation
2) Concessional rent free accommodation
3) Payment of employee’s obligation
4) Employee’s life insurance premium or annuity premium payable by employer .
5) Preseribed fringe benefits or amenities .
TAXABLE IN EMPLOYEES HAND
1) Interest free on concessional loan to an employee .
2) Use of moveable asset by an employee or any member of his households .
3) Transfer of moveable asset to an employee or any member of his household .
4) Any other benefits or amenity .
TAXABLE IN EMPLOYER’S HAND
1) Free or concessional transport
2) Travelling , touring and accommodation etc
3) Free food , beverages or refreshment facilities .
4) Any gift or voucher or token .
5) Credit card facility
6) Club expenditure .
SPECIFIC PERQUISITIES TAXABLE IN THE HANDS OF SPECIFIC EMPLOYEES
1) Facility of household servants
2) Free gas ,electricity and water .
3) Free education .
4) Medical facitily .
TAX FREE PERQUISITIES ( TAX FREE IN THE HAND OF EVERY EMPLOYEE )
Medical facilities
Recreational facilities
Conference
Tour and travel facilities
Accommodation in remote area
Refreshment facilities
Conveyance facilities
Telephone or mobile facilities
Lunch or dinner
Perquisites given in foreigh country
Accommodation to judges
Goods sold at concessional rates
Contribution to group insurance scheme
Free ration to armed personnals
Family planning facility
Scholarship to employee’s children
Free accommondation to ministers
Interest free loan up to Rs 20,000 .
Payment of accident insurance premium
Refresher course or training facilitiy
Conveyance facility to high court or supreme court judge .
Leave travel concession
Allotment of shares, debentures or warrents in certain cases .
Travelling expenses paid or reimbursed for business purpose .
Free education facility up to Rs 1,000 p.m per child
Car facility or car expenses
Use of computer , Labtop ,other perquisities .
{ Employees not having more than Rs 50,000 as monetory salaries income then all the
perquisities are exempt }

VALUATION OF PERQUISITIES
Valuation of perquisities means the ascertainment of the monetary value of the
perquisite provided by the employer to his employee .

VALUATION OF RESIDENTIAL ACCOMADATION

OR
RENT FREE HOUSE ( R.F.H )
( A ) GOVERNMENT EMPLOYEES :
Licence Fee determined by government xxxx

ADD: 10 % cost of furniture

or
Full hire value xxx
-----------------------
Xxxx

LESS: If any amount paid by employee xxx

-----------------------

TAXABLE VALUE R.F.H xxxx

============

OTHER EMPLOYERS OR NON GOVERNMENT EMPLOYEE

( A) ACCOMODATION OWNED BY THE EMPLOYER OR COMPANY :
15 % of salary ( if pop- of city is more than 25 lakh )
or
10 % of salary ( if pop-of city is more than 10 lakh
But below 25 lakh )
Or
7.5 % of salary ( if pop- of city is below 10 lakh ) xxxx
ADD: 10 % cost of furniture
Or
 Full hire value + xxx
-----------------
Xxxx
LESS : If any amount paid by employee xxx
-----------------
TAXABLE VALUE xxxx
=========
Salary for this purpose ;
( B . S + D.A ( Ret- B ) + D.P + Bonus + Comm + all the taxable allowance )

( A ) ACCOMODATION IS TAKEN ON LEASE OR ON RENT BY THE

EMPLOYER :
Actual Amount of Rent paid by employer
or
15% of salary ( which is less ) xxxx
ADD : 10 % cost of furniture
or
Full hire value xxx
--------------------
Xxxx
LESS : If anu amount paid by employee xxx
--------------------
TAXABLE VALUE XXXX
============
( Salary for this purpose : )
B . S + D.A ( ret- B ) + D.P + Bonus + comm + all the taxable allowance )

ACCOMADATION PROVIDED IN A HOTAL IN CASE OF T / F :

 Where accomadation is provided by the government ( employee ) or non
government to the employee in a hotal its value shall be as under :
( 1 ) if aggregate period does not exceeds 15 days the value
Shall be taken as …………………………………………………NIL
( 2) If aggregate period is exceeding 15 days then
( for example 21 days )
Actual Amount of 21 days
Or
24 % of B. Salary ( 21 days ) which is less ……………….xxxx
LESS : if any amount paid by employee ………………………… xxx
----------------
Taxable value xxxx
=========

ACCOMODATION PROVIDED AT SIDE ( MINING SIDE , OIL , PROJECT SIDE )

The value of such accommodation shall be taken as ………………..NIL
SWEEPER , GARDENER , WATCHMAN ,OR PERSONAL ATTENDENT ;
Value of the perquisite ……………………………………………xxxx
LESS ; If any amount paid by employee ………………………..xxx
------------
Taxable value xxxx
=======
GAS , ELECTRICITY , ENERGY OR WATER :
Value of the perquisite ……………………………………………xxxx
LESS: If any amount paid by employee …………………………xxx
--------------------
Taxable value xxxx
===========

Children education expenses paid or reimbursed is monetary obligation and it is taxable .

Valuation of perquisite in respect of free education :
Training of employees : Amount spend foe providing free education facilities to and
training of the employee is not taxable .
Payment of school fees of employee’s children :- school fees of the family members of
the employee, paid by the employer directly to the school is taxable as a perquisite
in all cases .
Reimbursement of school fees of employee’s children is taxable as a perquisite in all cases .

EDUCATIONAL FACILITY IS PROVIDED TO EMPLOYEE’S CHILDREN

If school is owned by employer ………………………………………..xxxx

Less : Rs 1,000 per month per children

( no restriction of number of children ) …………………………xxx

-------------------
TAXABLE VALUE xxxx
============

VALUATION OF LEAVE TRAVEL CONCESSION IN INDIA ( L.T.C.)

SECTION 10 ( 5 )

Leave travel assistance extended by an employer to an employee for going any

where in india along with his family is exempt on the basis of provisions .
 Amount of exemption is available only in respect of fare for going any where in
india along with family twice in a BLOCK OF FOUR YEARS .

VALUATION OF PERQUISITE IN RESPECT OF INTEREST FREE

LOAN :- If a loan is given by employer to the employee
(1 ) If amount of loan is Rs 20,000 or below Rs 20,000……taxable value …NIL
( 2 ) If amount of loan is exceeding Rs 20,000 but taken
For rule 3 A ………………………………………………………………….NIL
( 3 ) If amount of loan is exceeding Rs 20,000 and taken for any other
Purpose ( except rule 3 A )
( then it is chargeable as per S.B.I. )

VALUATION OF PERQUISITE OF MOTER CAR

RULE 3 ( 2 ) A and B
( a ) Car owned or hired by the employer :
Car is used wholly for official duties ………………………..NIL
( b ) Car owned by the employer and used for private purpose ( personal)
( 1 ) Actual amount of expenditure incurred on the
Running and maintenance of moter car ……………………xxxx
( 2) Remuneration if paid to driver ……………………………….xxxx
( 3 ) Dep - @ 10 % p . a . of the actual cost of car ……………..xxxx
-----------------------------
Xxxx
LESS :- If any amount charged from employee xxx
--------------------------------
Taxable value xxxx
==================
Car owned or Hired by the employer
Car is used partly in the performance of office duties and partly for private of
personal purpose of employee both :
( 1 ) If the entire expenses of moter car are borne ( met ) by the employer :
SMALL CAR
Rs 1,800 p . m ( if capacity of the engine of car is up to 1.6 litres or 1600 cc )
BIG CAR
Rs 2,400 p. m. ( if capacity of the engine of car is above 1.6 litres or 1600 cc )

( If driver ( chauffeur’s ) is both case ( big and small ) Rs 900 per month )

If the entire expenses of moter car are borne ( met ) by the employer
SMALL CAR : Rs 600 per month
BIG CAR : Rs 900 per month
If Driver ( chauffeur’s is both case ( Big and Small ) Rs 900 per month .

EMPLOYEE USES MORE THAN ONE CAR FOR OFFICE AND PRIVATE
PURPOSE :

\
---------------------------------------------------------------------
RULE + EXPENCES
( A) IN RESPECT OF ONE CAR
( 1 ) Small car Rs 1,800 per month
( 2 ) Big Car Rs 2,400 per month
( If Driver is also provided Rs 900 per month )

( B ) In respect of other car :

The value of car may be determined in such
manner which is beneficial of the employee .

CAR OWNED BY THE EMPLOYEE :

( 1 ) Car owned by the employee and used for official purpose ……….NIL

( 2 ) CAR OWNED BY THE EMPLOYEE AND USED FOR PRIVATE PURPOSE :

Actual exps …………………………………………………..xxxx
ADD : Driver remuneration ……………………………………xxx
--------------------
Taxable Perquisities xxxx
===========

( 3 ) Car is owned by employee and used for official and private purpose both

SMALL Car
Actual exps ………………………………………………..xxxx
Less : - Rs 1,800 + 900 ( if driver ) ………………………xxx
---------------------
Taxable value xxxx
=============
BIG CAR
Actual exps …………………………………………………xxxx
Less : - Rs 2,400 + 900 ( if driver ) ………………………..xxx
…………………….
Taxable value xxxx
==============

TAX TREATMENT OF PROVIDENT FUND

 Provident fund scheme is a welfare scheme for the benefit of the employees ,
under this scheme certain sum is deducted by the employer from the
employee’s salary as his contribution to the provident fund every month.
The employer also contributes a certain percentage of the salary of the
employee to the provident fund . these contribution are deposited / invested .
The interest earned on these investments is also credited to
the provident fund account of employees , The balance thus keeps
accumulating year after year . At the time of retirement amount is given to the
employee .
KINDS OF PROVIDENT FUNDS
1) Recognized provident Funds
2) Unrecognized provident Funds
3) Statutory provident Funds
4) Public provident Funds
PROVIDENT FUND
R.P.F. Un-R.P.F Stat-P.F. or P.P.F
P.F. APP-To 1925
Employer’s contribution
To R.P.F ………………….xxxx
Less : 12% of salary xx
………..
Taxable value xxxx NIL NIL
=======
Interest of R.P.F …………xxxx
Less : 9.5% …………… xx
…………
Taxable value xxxx
======= NIL NIL
At the time of retirement lump At the time of retirement At the time of
Sum received taxable value 1/2 amount is taxable retirement
NIL taxable value
NIL
SALARY FOR THIS PURPOSE: ( B.S + D.A ( R ) D. P + COMM( S ) )
VALUATION OF PERQUISITE IN RESPECT OF LUNCH / REFRESHMENT etc .
Tea and snacks provided during working hours ……………………………..NIL
Free food and non electric bevevages provided during working
Hours in remote area or in an off -store installation ……………………………NIL

Food and non alcoholic bevevages in office premises or through non transferable paid
vouchers usable only at eating joints .
Cost of meal ……………………………………………………………..xxxx
LESS :- Rs 50 per meal xx
--------------------
Xxxx
LESS :- If any amount paid by employee xxx
--------------------
Taxable value xxxx
===========

VALUATION OF PERQUISITE IN RESPECT OF GIFT VOUCHER OR TOKEN

The value of any gift or voucher or token in lieu of which such gift may be received
by the employee or by the member of his household on ceremonial occasions or
otherwise shall be determined as the sum equal to the amount of such gift .
Where however the value of such gift voucher or token as the case may be
perquisite shall be taken as ……………………………………………………NIL

DEDUCTIONS FROM SALARY

From the gross salary so computed the following three deductions are allowed
under section 16 : -
( 1 ) Standard deduction up to Rs 50,000 [ sec 16 ( I ) ]
( 2 ) Entertainment allowance u/s 16 ( ii) : - entertainment allowance is first included
in computation of the gross salary , A deductions is than allowed u/s 16 ( ii ) , if
conditions preseribed have been satisfied .
( 3 ) Tax on employment ( professional tax ) u/s 16( iii ) .

COMPUTATION OF TAXABLE INCOME FROM SALARY FOR THE ASSESSMENT

YEAR 2021- 2022 ( P.Y 2020-2021 )
Basic salary xxxx
Advance salary or Arrears of salary xxxx
Dearness pay xxxx
Dearness allowance xxxx
Bonus xxxx
Commission xxxx
Fees xxxx
Allowance : Fully taxable xxxx
Partly taxable xxxx
Taxable perquisites xxxx
Profit in lieu of salary xxxx
Contribution of employer’s in R.P.F in excess of
12 % of salary xxxx
Interest on R.P.F in excess of 9.5 % xxxx
-----------------
Gross salary income xxxx
LESS :- Ded u/s 16 :
16 ( I ) S.D ( up to 50,000) xxxx
16 ( ii ) Entertainment allowance xxxx
16 ( iii ) professional tax
Or
Employment tax xxxx
--------------
Xxxx (-) xxxx
-------------------
Taxable Salary xxxxxxxxxx
==============