Glossary
Perquisites
Meaning & Definition
Perquisites (Perks) are additional benefits or facilities provided by an employer to an employee in addition to regular salary or wages. They may include company-provided accommodation, a company car, meal benefits, or other non-cash benefits. Some perquisites may be taxable depending on applicable tax rules.
Importance of Perquisites
- Enhances the overall value of an employee’s compensation package.
- Helps attract and retain skilled employees.
- Improves employee satisfaction and engagement.
- Provides employees with additional financial or lifestyle benefits.
- Helps organizations design competitive and flexible compensation structures.
Legal Compliance and Policies
The Income Tax Act, 1961 and applicable Income-tax Rules, 1962 govern the taxation and valuation of taxable perquisites provided to employees. Employers must calculate taxable perquisites correctly and consider them while determining Tax Deducted at Source (TDS) on salary, wherever applicable.
