Glossary
Perquisites
Meaning & Definition
Perquisites refer to the benefits or facilities given to the employees by the employers apart from the salary that is paid to the employees. Such benefits include employer accommodation, company vehicles, certain allowances, loans or other non-cash benefits. Based on the nature of perquisites, some perquisites are considered taxable based on the income earned by the employee.
Importance of Perquisites
- They form an important element of the remuneration provided to employees.
- Provide employees with useful facilities within the workplace.
- Can be monetary, non-monetary or employer-provided facilities.
- Influence the remuneration provided to an employee.
- Important in structuring the remuneration packages of organizations.
- Need to be identified and reported for the purpose of taxation.
Legal Compliance & Applicable Policies
- The taxation of perquisites is regulated mainly through the Income Tax Act, 1961 and the Income Tax Rules, 1962. It will depend on the nature and value of the benefit along with the status of the employee.
- Employers should identify the value of taxable perquisites, make appropriate additions to salary, report the same in the salary documentation of the employees.
