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Which perquisites are exempt from tax in the hands of employees?

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posted Jul 17 by Aayushi Bansal

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Perquisites may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. It also denotes something that benefits a man by going into his own pocket; it does not, however cover mere reimbursement of necessary disbursements. Perquisites can be divided in the following 3 categories:

  1. Perquisites taxable in all cases
  2. Perquisites not taxable
  3. Perquisites which are taxable only in the hands of specified Employees.

Non Taxable

  • Leave travel concession subject to conditions & only actual amount spent.
  • Comp / Laptop for official/personal use.
  • Initial fees paid for corporate membership of a
  • Refreshment provided during working hours in office premises.
  • Payment of annual premium on personal accident policy.
  • Subscription to periodicals and journals required for discharge of work.
  • Provision of Medical Facilities.
  • Gift not exceeding Rs. 5000 p.a.
  • Use of health club, sports facility.
  • Free telephones: fixed or mobiles.
  • Interest free / concessional loan not exceeding Rs. 20,000 (limit not applicable for medical treatment).
  • Children Education Allowance (Rs.1 00 p.m. per child — max. 2 children) &
  • Hostel Allowance (Rs. 300 p.m. per child — max. 2 children) is exempt.
  • Transport Allowance: Rs. 800 p.m.— Rs.1,600 p.m. (If handicapped)
  • Fixed Medical Allowance is taxable in the hands of employees however, Medical Faciliües in a private clinic is exempt to the extent of Rs. 15,000 and in government hospitals to any extent.
  • Contribution to Medical Insurance Policy by employer is exempt to tax in th hands of employees to any extent.
  • Amount spent for providing free educaonal facilies and training of the employee is not taxable in the hands of employees to any extent
  • Gift to employees of Movable Assets (other than computer/laptop, electronic items and car) after using for 10 yrs.
  • Contribution to recognised Provident Fund / approved super annuation fund, pension or deferred annuity scheme & staff group insurance scheme.
  • Free meal provided during working hours or through paid non transferable vouchers not exceeding Rs. 50 per meal or free meal provided during working hours in a remote area.
  • The value of any benefit provided free or at a concessional rate (including goods sold at concessional rate) by a company to the Employees byway of allotment of shares etc., under the Employees stock opton plan as per Central Government Guidelines
answer Jul 18 by Babita Thawani
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