Are you curious to know what is perquisites? You have come to the right place as I am going to tell you everything about perquisites in a very simple explanation. Without further discussion let’s begin to know what is perquisites?
Perquisites, often referred to as “perks” or “fringe benefits,” play a significant role in the realm of income tax and salary structures. These additional benefits, beyond the basic salary, can have implications for both employers and employees. This comprehensive guide aims to demystify the concept of perquisites, exploring their definition, examples, and relevance in income tax.
What Is Perquisites?
In the context of income tax, perquisites refer to non-monetary benefits provided by an employer to an employee in addition to their salary. These benefits are considered a form of taxable income and are subject to taxation under certain circumstances.
What Is Perquisites In Salary?
Perquisites in salary encompass the various non-cash benefits and amenities that an employee receives from their employer. These could include housing accommodation, company cars, medical benefits, and more. Understanding the scope of perquisites in salary is crucial for both employers and employees to ensure accurate taxation.
What Is Perquisites Example?
Examples of perquisites include:
- Accommodation: Providing housing or accommodation facilities to employees.
- Company Vehicles: Offering the use of company cars for personal and official purposes.
- Medical Benefits: Covering medical expenses or providing health insurance coverage.
- Interest-Free Loans: Offering loans to employees at concessional interest rates or interest-free.
- Club Memberships: Providing memberships to clubs, gyms, or recreational facilities.
What Is Perquisites In Hrm?
In Human Resource Management (HRM), perquisites play a role in attracting and retaining talent. Companies often include attractive perquisites in their employment packages to enhance the overall compensation structure and create a positive work environment.
What Are Tax-Free Perquisites?
While many perquisites are taxable, certain benefits are considered tax-free. These tax-free perquisites are either fully exempt or have specific conditions and limits set by tax authorities. Common tax-free perquisites may include medical reimbursements up to a certain amount, employer contributions to recognized provident funds, etc.
Types Of Perquisites
Understanding the types of perquisites helps in navigating their tax implications. Some common types include:
- Fixed Perquisites: Those provided uniformly to all employees, such as accommodation or transportation facilities.
- Variable Perquisites: Benefits that vary based on the employee’s role or level, like stock options or performance-based bonuses.
- Fully Taxable Perquisites: Benefits subject to full taxation, like rent-free accommodation.
- Partially Taxable Perquisites: Benefits that are taxable to a certain extent, such as a company car provided for personal use.
Types Of Perquisites Pdf
A detailed PDF document outlining the types of perquisites can serve as a valuable resource for employers, tax professionals, and employees. This document can provide clarity on the tax implications of different perquisites.
Perquisites Under Section 17(2)
Section 17(2) of the Income Tax Act, 1961, outlines the specific types of perquisites that are taxable. Employers must be aware of this section to correctly assess and report taxable perquisites.
Conclusion
In conclusion, perquisites form an integral part of salary structures and have implications for both employers and employees, especially in the context of income tax. It is essential for organizations to understand the types of perquisites, their taxability, and compliance with relevant tax regulations. Additionally, employees should be aware of the tax implications of the perquisites they receive as part of their compensation.
FAQ
What Do You Mean By Perquisites?
1. PERQUISITES. “Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. “Perquisite” is defined in the section 17(2) of the Income tax Act as including: (i) Value of rent-free/accommodation provided by the employer.
What Is An Example Of A Perquisite?
It includes simple benefits like fuel reimbursement, a company-provided car or accommodation, etc. Perquisites may also include medical facilities, interest-free loans, credit cards, and so on.
What Is Perquisites India Tax?
Ideally, perquisites are taxed at the rate of 30% of the entire value of the availed fringe benefits. Notably, the perquisite tax is paid by the employers who provide these above-mentioned benefits to their employees. They can be either a firm, a company, a body of individuals or an association of individuals.
What Is Perquisites And Allowances?
Allowances are payments made by the employer to the employee to cover certain expenses, such as house rent, conveyance, medical expenses, or travel expenses. Perquisites are additional benefits the employer provides in the form of goods or services, such as accommodation, a company car, or club memberships.
I Have Covered All The Following Queries And Topics In The Above Article
what is perquisites in income tax
What is perquisites in salary
What is perquisites example
What is perquisites in hrm
what are tax-free perquisites
types of perquisites
types of perquisites pdf
perquisites under section 17(2)
what is perquisites