Law Legends


Perquisites in Income Tax

What are Perquisites in Salary ?

"Perquisites " are additional benefits that an employee receives . Received in addition to salary . These benefits are taxable or non-taxable depending on their nature . can be made. Facilities provided by the employer to the employees are included in Perquisites and are taxable as per the terms and conditions.

Perquisites meaning
  • Any benefit that is being given to the employee other than salary or wages , which is attached to his office or position .
  • Perquisites also include those benefits which are given to specified employees for free or at concessional rate . Or
  • An obligation that was to be paid by the employee but has been paid by the employer.

Perquisites include rent free accommodation, motor car, gardener supply of electricity, ESOP, interest free loan, leave travel allowance, leave encashment, free food and non alcoholic beverages etc.

Now we will see what is meant by specified employee .

To all the following persons Specified employees will be considered:-

  1. Employee who is a director in the company ,
  2. Employee who has substantial interest in the company e. 20 % or more of voting _ Is the beneficial owner of the equity shares having rights .

Employee whose monetary income under salary head is Rs 50,000. ( Annually ) Exceeds it

Now we section 17 sub About section 3 Profits in lieu of Salary or Wages will understand


Profits in lieu of Salary means payment received by the employee in addition to regular salary . It covers all the following payments .
  • Compensation for termination of employee or modification of employee 's terms will be included .
  • due or received from unrecognized provident fund or unrecognized superannuation fund will be included ,
  • The amount received from Keyman Insurance Policy will also be included,


Any lump sum amount due or received by the assessee from any other person before joining employment or after cessation from employment will be considered included in the payment .


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