Perquisite may be defined as any casual remittance or advantage attached to an office or position in addition to salary or wages. It also signifies something that benefits a man by going into his own money. Perquisites may be given in cash or in kind. Notwithstanding, perquisites are taxable under the head “Salaries” just on the off chance that they are
a. allowed by an employer to his employees;
b. allowed during the continuance of business;
c. directly reliant upon administration;
d. resulting in the nature of personal advantage to the representative; and
e. derived by temperance of employer’s authority.
It isn’t necessary that a recurring and regular receipt alone is a perquisite. Indeed, even a casual and non-recurring receipt can be perquisite if the aforesaid conditions are satisfied. The following recommendations ought to also be kept in see:
• Perquisites are included in salary income just on the off chance that they are gotten by a worker from his employer (maybe former, present or imminent). Perquisites, gotten from an individual other than employer, are taxable under the head “Profits and gains of business or profession” or “Income from other sources”.
• Any advantage would be taxable as perquisites just on the off chance that it has a legal origin. As undue facility advantage taken by a representative without his employer’s authority would create a legal obligation to restore such advantage, it would not amount to “perquisite” taxable under the Act. Then again, if the advantage has been given unilaterally without the aid of agreement between the parties, the worker can be taxed on the perquisites. It isn’t necessary that the advantage ought to have been gotten under an enforceable right.
Under the Act, the expression “perquisites” is defined by section 17(2) as including the following things:
1. the value of lease free accommodation gave to the assessee by his employer [sec. 17(2)(i)];
2. the value of any benefits in the matter of lease respecting any accommodation gave to the assessee by his employer [sec. 17(2)(ii)];
3. the value of any advantage or amenity granted or gave liberated from cost or at confessionals rate in any of the following cases:
i. by a company to a worker who is a director thereof;
ii. by a company to a worker, being an individual who has substantial interest in the company;
iii. by any employer (including a company) to an employee to whom Sections of (I) and (ii) above don’t apply and whose income under the head “Salaries” restrictive of the value of all advantages or amenities not accommodated by way of monetary advantages, surpasses Rs. 50,000 [sec. 17(2)(iii)];
4. any entirety paid by the employer in regard of any obligation which yet for such payment would have been payable by the assessee [sec. 17(2)(iv)];
5. any entirety payable by the employer, whether legitimately or through a reserve other than a perceived fortunate store or approved superannuation finance or a store linked insurance subsidize, to impact an assurance on the life of the assessee or to impact a contract for an annuity [sec. 17(2)(v)];
6. the amount of any commitment to an approved superannuation finance by the employer in regard of the assessee, to the degree it surpasses Rs. 1,50,000 [sec. 17(2)(vii)]; and
7. Cost (value) of any other fringe benefits or amenity as may be recommended [sec. 17(2)(viii)].