Perquisites

Perquisite:
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. However, they may include cases where the employer reimburses expenses or pays for obligations incurred by the employee. Perquisites are also referred to as fringe benefits. Perquisites are taxable under salaries provided they are: 

Allowed by an employer to his employee;  Allowed during the continuance of employment;  Directly dependent upon service;  Resulting in personal advantage to the employee;  Derived by virtue of the employer s authority;

U/s 17 (2) perquisites includes: 

The value of rent free accommodation provided to the assessee by his employer [sec. 17(2)(i)];  The value of any concession in the matter of rent respecting any accommodation provided to the asessee by his employer [sec. 17(2)(ii)];  The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: By a company to an employee who is a director thereof; By a company to an employee, being a person who h substantial interest in the company; By an employer (including a company) to an employee to whom provision of (i) and (ii) above do not apply and whose income under the head Salaries exclusive of the value of all benefits or amenities not provided for by way of monetary benefits, exceeds Rs. 50,000 [sec. 17(2)(iii)]; 

Any sum paid by the employer in respect of any obligation which but For such payment would have been payable by the assessee [sec.17(2) (IV)]; Any sum payable by the employer, whether directly or through a fund other than a recognized provident fund or approved superannuation fund or a depositlinked insurance fund, to effect an assurance on the life of the assessee or to effect a contract for an annuity [sec. 17(2)(v)]; The value of any other fringe benefit or amenity as may be prescribe [sec. 17(2) (VI)].
The new rules are made effective from 01-04-2001, under the new rules, perquisites provided to the members of household shall also be taxed. For this purpose member of household whether dependent of not shall include: a) Spouse(s) b) Children and their spouses c) Parents d) Servants and dependents.

The perquisites for the purpose of valuation can be classified as falling into two categories namely, those which are taxable in the case of all he employees and those which are taxable in the hands of specified employees. These perquisites are : 

Residential accommodation.  Free or concessional education.  Interest-free or concessional loans.  Use of employer s movable assets.  Transfer of employer s movable assets.  Domestic servants.  Supply of gas, water, electricity.

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