It is any benefit given by an employer to his employee or any member of his household free of cost or at concessional rate.

Member of household includes:

  • Spouse (whether dependent or not);
  • Children and their spouse (whether dependent or not);
  • Parents (whether dependent or not);
  • Other Dependents

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

TAXABLE (Subject to Conditions)

  1. Rent Free Accommodation
  2. Concessional Rent House
  3. Obligation of employee met by Employer. Amount paid by Employer regarding :
  • Supply of Gas, Electricity & Water
  • Free or Concessional Education Facilities of Children
  • Professional Tax on employee
  • Salary of servant employed by employee
  • Motor Car or any other Conveyance for personal use of Employee
  • Reimbursement of Medical Expenditure
  1. Any other benefits given by employer to employee :
  • Free meals if provided by during working hours and value exceeds Rs.50 per day. Excess is taxable.
  • Gifts exceeding Rs.5,000
  • Club facilities actual expenditure is taxable.
  • Credit Card and add on card-actual fee is taxable
  • Interest free loans or loan at concessional rate of interest if more than Rs.20,000 and if not for medical treatment-difference between prescribed rate and rate charged is taxable.
  • Use of movable assets except computers and laptops.
  • Transfer of movable assets.
  • Expense on tours and travels.


  1. Leave Travel Allowance subject to conditions & actual spent only for travels.
    Initial Fees paid for corporate membership of a club.
  2. Refreshment provided during working hours in office premises.
  3. Payment of annual premium on Personal Accident Policy.
  4. Subscription to periodicals and journal required for discharge of work.
  5. Provision of Medical Facilities.
  6. Gift not exceeding Rs. 5,000 p.a.
  7. Use of Health Club, Sports facility.
  8. Free telephones whether fixed or mobile phones.
  9. Interest free / concessional loan not exceeding Rs. 20,000 (limit not applicable for medical treatment).
  10. Contribution to recognized Provident Fund / approved super  annuation fund, pension or deferred annuity scheme & staff group insurance scheme.
  11. Free meal provided to all employees in office upto Rs 50 per meal employee or provided by the employer through paid vouchers usable at eating joints.
  12. Allotment of shares, debentures to its employees under ESOP in accordance with Govt guidelines
  13. Contribution to Medical Insurance Policy by employer is exempt to tax in the hands of employees to any extent.
  14. Free recreational facilities.
  15. Amount spent for providing free educational facilities and training of the employee is not taxable in the hands of employees to any extent


  1. Car owned by employer but used by employee both for personal and official purpose.
  2. Gas and Electricity facility.
  3. Education facility for children.
  4. Free Transport Allowance by employer engaged in Transport Business.
  5. Service of Domestic servant provided by employer.