List of 'Perquisites' for Computation of Income under the head 'Salary'

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Rent-free unfurnished house

• In the case of Government employee (i.e., Central Government employee, State Government employee or a Government employee on deputation to a public sector undertaking if house is allotted by the Government):

  Taxable value is the license fees of the house as per house allotment scheme of the Government.

• In the case of non-Government employees:

  • - If the house is owned by employer :

    Taxable value is 15 % of salary of employee of the relevant period (7.5 % if population is 10 lakh or less or 10 % if population is above 10 Lakh but not more than 25 Lakh).

  • - If house is taken on lease by employer:

    Taxable value is either 15 % of the salary or lease rent, whichever is lower.

Rent-free furnished house

Value of “furniture” will be added to the value of rent-free unfinished house as computed above. Value of furniture is 10 % per annum of cost of furniture to the employer or rent paid / payable of the furnishing by the employer, as the case may be.

Concession in rent

Value of the perquisite in respect of rent-free furnished / unfurnished house will be calculated as given above. From the amount so calculated, rent charged by employer shall be deducted. The balance (if it is positive) is taxable value of the perquisite in respect of concession in rent.

Rent-free / concessional
furnished / unfurnished house in special cases

• Not chargeable to tax if provided in a “remote area”.

• Hotel accommodation/guest house accommodation provided to an employee is taxable at the rate of 24 % of salary of the relevant period or hotel tariff, whichever is lower.

• Hotel accommodation for 15 days (in aggregate in a previous year) can be provided immediately after transfer at the new location as a tax-free perquisite.

• Further, if an employee is transferred and housing facility is provided to him at the new location (he has yet to vacate a house given at the old location), for a period of 90 days immediately after transferred only one house (at the option of the employee at the old location or new location) is chargeable to tax.

• Perquisite in respect of rent-free furnished/unfurnished house is not taxable if provided to a High Court Judge, Supreme Court Judge, Union Minister, leader of opposition in Parliament, an official in Parliament and serving Chairman/members of UPSC.

Free domestic servants

Actual expenditure of the employer (as reduced by any amount paid by the employee) is a taxable perquisite in the hands of an employee.

Gas, electricity or water supplied after purchasing from outside agency

Actual amount spent by the employer (as reduced by any amount recovered from the employee) is a taxable perquisite in the hands of an employee.

Free education facility

• Expenditure relating to providing training to employees is not taxable.

• If education facility is provided to the family members of employee, expenditure incurred by the employer is the taxable value of perquisite.

• If education facility is provided to the family members in an educational institute owned or maintained by the employer, then reasonable cost of education in a similar institute in or near the locality is taxable.

• Up to Rs. 1,000 per month per child is not taxable if the employer provides education facility to the children of an employee in an educational institution owned/maintained by the employer.

Leave travel concession (LTC)

Only 2 journeys in a block of 4 years is exempt (however, carry over concession is available).

• Exemption is based upon actual expenditure relating to travel fare only in respect of the shortest route from the place of origin to farthest point.

Employee’s obligation met by employer

Taxable in all cases

interest-free / concessional loan

• Find out the maximum outstanding balance on the last day of each month. It shall be multiplied by SBI landing rate on the first day of the previous year. Amount recovered from the employee on account of interest is deductible.

• Perquisite is not taxable if the aggregate amount of original loan does not exceed Rs. 20,000.

• Moreover, if loan is given by employer for medical treatment (given in rule 3A) of the employee or his family members, it is not chargeable to tax.

Use of employer’s movable assets

10 % per annum of actual cost of asset to the employer or hire charges as reduced by any amount recovered from the employee, is a taxable perquisite in the hands of an employee.

Sale of movable assets

Actual cost to the employer minus normal wear and tear minus sale consideration paid by the employee, is taxable

Normal wear and tear for each year of use is calculated as follows —

1. Computer / Electronic Items : 50 % by reducing instalment method;

2. Car : 20 % by reducing instalment method;

3. Any other Asset : 10 % of cost.

Medical facilities

• The perquisite in respect of medical facility provided by an employer in the following hospitals/clinic is not chargeable to tax —

  1. Hospital owned/maintained by the employer,

  2. Hospital of Central Government/State Government/local authority,

  3. Private hospital if it is also recommended by the Government for the treatment of Government employees,

  4. Specified medical facility (given in rule 3A) in a hospital approved by the Chief Commissioner.

• Medical insurance premium paid or reimbursed by the employer is not chargeable to tax.
  

• Any other expenditure incurred or reimbursed by the employer for providing medical facility in India is chargeable to tax (exemption of Rs. 15,000 was available for such reimbursement up to the assessment year 2018-19).
  

• Expenditure on medical treatment (including boarding and lodging) incurred by an employer outside India is not chargeable to tax in the hands of employee if it does not exceed the amount permitted by RBI under foreign exchange regulations.

  • Travelling expenditure for going outside India for medical treatment purposes is generally chargeable to tax.

Motor car

Car owned or hired by employer, expenses incurred by employer and used for partly official and parily personal purposes -

• Rs. 1,200 per month (1,600cc or less)/

• Rs. 2,400 per month (above 1,600cc) for car and Rs. 900 per month for driver.

  • Expenditure recovered from employee is not deductible.
    

Car owned or hired by employer, expenses incurred by employer and used wholly for personal purposes -

• Entire expenditure incurred by employer including depreciation at the rate of 10 % per annum of actual cost of the car, is taxable in the hands of employer.

  • Expenses recovered from employee are deductible.

Car owned or hired by employer, used for partly official and partly personal purposes, expenses for private purposes incurred by employee -

• Rs. 600 per month (1,600cc or less)/

• Rs. 900 per month (above 1,600cc) for car and Rs. 900 per month for driver.

  • Expenditure recovered from employee is not deductible.
    

Car owned by employee, expenses incurred by employer and used for partly official and partly personal purposes -

• Actual expenditure incurred by employer minus expenditure pertaining to official use minus anything recovered from employee, is taxable in the hands of employee.

• Expenditure pertaining to official use can be calculated as per logbook of the car.

Alternatively, expenditure pertaining to official use can be calculated at the rate of

• Rs. 1,800 per month (1,600cc or less)

• Rs. 2,400 per month (above 1,600cc) for car and Rs. 900 per month for driver.
  

Conveywice facility when not taxable -

• Conveyance facility between office and residence is not chargeable to tax in the case of any employee of any organization.

• Moreover, conveyance facility to a High Court Judge, Supreme Court Judge and serving Chairman/members of UPSC, is not chargeable to tax.

Free transport

Taxable as a perquisite in the hands of an employee on the basis of value at which the employer offers such benefit to the public as reduced by any amount recovered from the employee

(tax free perquisite in the hands of employees of railways/airlines).

Lund:, refreshment, etc.

• Food and non-alcoholic beverages are provided in working hours in remote area or in an off-shore installation:

  • Fully exempt from tax.
    

• Lunch/refreshment is provided in working hours at any other place:

  • Cost to the employer in excess of Rs. 50 per meal (as reduced by the amount recovered from the employee) is the taxable value of perquisite in the hands of the employee

  • (tea and snacks in working hours is tax-free perquisite).

Travelling, touring, accommodation

• When such facility is available uniformly to all employees :

  • Taxable as a perquisite in the hands of an employee on the basis of actual expenditure of the employer as reduced by any amount recovered from the employee.

• When suth facility is not available uniformly to all employees :

  • Taxable as a perquisite in the hands of an employee on the basis of value at which such facilities are offered by other agencies to the public as reduced by any amount recovered from the employee.

Gift, voucher or token

• Taxable as a perquisite in the hands of an employee on the basis of actual expenditure of the employer

(gift may be made either to employee or any member of his household.)

• Gift-in-kind up to Rs. 5,000 per annum is exempt).

Credit card

Expenditure incurred by the employer minus expenditure pertaining to official use minus anything recovered from the employee, is taxable

Club

• Expenditure incurred (including annual or periodical fees) by the employer minus expenditure pertaining to official use minus anything recovered from the employee, is taxable.

• Health club/sports club facility given uniformly to all employees in employer’s premises, is not taxable.

• The initial one time deposits or fees for corporate or institutional membership, where benefit does not remain with particular employee after cessation of employment, are exempt.

Specified security or sweat equity shares allotted on or after April 1, 2009

Fair market value of shares/securities on the date on which option is exercised by the employee, is taxable in the hands of employee.

• Amount, if any, recovered from the employee is deductible.

Employer’s contribution towards approved super- annuation fond

Amount in excess of Rs. 1.5 Lakh per assessment year is taxable in the hands of employee.

Perquisite received by a
teacher/researd:erfronz a
SAARC member State

Not taxable up to 2 years.

Telephone/mobile phone

Not taxable.

Residential telephone to retired Ciwinnan/members of IJPSC

Value of a residential telephone free of cost and the number of free calls to the extent of Rs. 1,500 per month (over and above the number of free calls per month allowed by the telephone authorities), is not taxable.

Any other facility

Taxable as a perquisite in the hands of an employee on the basis of actual expenditure of the employer as reduced by any amount paid by the employee.