Perquisites are incidental payment, benefit, privilege, or advantage over and above regular income, salary, or wages. Any payment made to an employee by an employer in the form of cash or kind other than basic salary, festival bonus, incentive bonus not exceeding 10% of disclosed profit, arrear or advance salary, leave encashment, overtime and any benefit other than contribution to provident fund, approved pension fund, gratuity fund and superannuation fund.
The rules of perquisite
There are several rules regarding rules perquisites, some are discussed below –
Dearness Allowance: It is the most popular allowance being given to employees these days. It means the payment made by the employer to the employee to cope with the higher cost of living, which in general is certain percentage of the basic salary.
Bonus: It means the payment of extra salary based on the basic salary or otherwise for festivals like Eid, Christmas etc or rewards for good performance. The total amount of bonus is taxable the therefore included under income from salary.
Special Allowance: Any special allowance, benefits, or perquisites specially granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit are totally exempted from tax.
House ret Allowance: This sort of relief is granted by the employer to the employee in order to compensate him in the matter of higher rent prevailing to the employee in order to compensate him in the matter of higher rent prevailing in big cities.
Entertainment Allowance: This is an allowance given to the employee for entertaining customers or clientele of the employer. The whole amount of entertain allowance will be included under the head salary income and there will be no exception. But nothing will be added for, free tea, coffee, beverages or the like thereof that are provided at the office premises during the course of work.
Perquisite is a casual emolument or benefit attached to an office or position in addition to salary, or wages which s availed by an employee. Perquisites may be given in a verity of forms. They may be received into cash or in kind. Perquisites received in-kind may or may not be convertible into cash. Perquisite includes-
- The value of rent-free accommodation provided by the employer.
- The value of concession in respect of accommodation provided to assesses by his employer.
- The value of any benefits or amenity granted o provided free of cost or at concessional rate to specified employees.
- The sum paid by an employer in respect of any obligation of an employee.