Discuss the various types of Perquisites under the Indian Income Tax Act.

The Three types of perquisites have been identified under the Indian Income Tax Act:

Perquisites taxable for all categories of employees: They are:

Rent free house provided by the employer, House provided at concessional rent, Insurance premium paid on the life of the employee.

Payments made by employers to cover those expenses which the employees would pay for themselves if the employer does not make the payment. For e.g., salary of domestic servant, school fees of children, loans, etc.,

The value of any other fringe benefit. When an employee gets rent for accommodation while he is staying in another place on a business tour, it is not considered as perquisite.

Perquisites Taxable for specified employees:

• Motor Car,
•  Gas, electricity and water,
• Transport,
• Free education to employee’s children in employer’s institution,
• Sweeper, watchman, gardener, etc.,
• Refrigerator, heater, etc.,
• Facilities of free boarding and lodging at Holiday Homes,
• Issue of shares at a concessional price,
• Free Lunch.

Tax Free Perquisites for all categories of employees:

Medical Facility: The medical treatment provided free of cost to employees, including directors/managers where the employer pays for the hospital bills, medicines, etc. is tax free in India, but it must be treatment in some recognized public hospital. If the employee himself has incurred expenditure on the same for himself or his family, and the employer reimburses.

• Refreshment for employees during office hours.
• Free telephone at employee’s residence partly used for office and partly for personal use.
• Subsidized lunches during office hours.
• Recreational facilities.
• Amount spent by the employer on refresher course for employees training.
• Goods sold by the employer to his employees at concessional rates.
• To and fro conveyance between home and office.
• Free railway passes to railway employees.
• Limited leave travel concession.
• Employer’s contribution to staff group insurance scheme.
• Perquisites allowed to government servants outside India to its employees who are providing services outside India.
• Value of free rations given to the armed forces personnel.
• Value of the facilities of promoting family planning among the employees.
• Value of rent-free official residence, conveyance facilities and sumptuary allowance provided to the High court and Supreme Court judges.

Value of rent-free furnished residence (including maintenance thereof) provided to a minister, an office of parliament or a leader of the opposition in parliament.

Scholarships given by the employer to children of the staff members is not a perquisite to the employees. If it is treated as a perquisite, it is exempt u/s 10(6).