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͞Perquisite͟ may be defined as any casual emolument or benefit attached to an
office or position in addition to salary or wages. In essence, these are usually non-cash
benefits given by an employer to employees in addition to cash salary or wages. However,
they may include cases where the employer reimburses expenses or pays for obligations
incurred by the employee. Perquisites are also referred to as fringe benefits.

Perquisites are taxable under salaries provided they are:

< Sllowed by an employer to his employee;

< Sllowed during the continuance of employment;

< Directly dependent upon service;

< Resulting in personal advantage to the employee;

< Derived by virtue of the employer͛s authority;

Æ s 17 (2) perquisites includes:

< The value of rent free accommodation provided to the assessee by his employer
[sec. 17(2)(i)];

< The value of any concession in the matter of rent respecting any accommodation
provided to the asessee by his employer [sec. 17(2)(ii)];

< The value of any benefit or amenity granted or provided free of cost or at
concessional rate in any of the following cases:

By a company to an employee who is a director thereof;

By a company to an employee, being a person who h substantial interest in

the company;

By an employer (including a company) to an employee to whom provision

of (i) and (ii) above do not apply and whose income under the head ͞Salaries͟
exclusive of the value of all benefits or amenities not provided for by way of
monetary benefits, exceeds Rs. 50,000 [sec. 17(2)(iii)];
 <Sny sum paid by the employer in respect of any obligation which but For such
payment would have been payable by the assessee [sec.17(2) (IV)];

<Sny sum payable by the employer, whether directly or through a fund other
than a recognized provident fund or approved superannuation fund or a deposit-
linked insurance fund, to effect an assurance on the life of the assessee or to
effect a contract for an annuity [sec. 17(2)(v)];

<The value of any other fringe benefit or amenity as may be prescribe [sec. 17(2)
(VI)].

The new rules are made effective from 01-04-2001, under the new rules,
perquisites provided to the members of household shall also be taxed. For this
purpose ͞member of household͟ whether dependent of not shall include:
a) Spouse(s)

b) Children and their spouses

c) Parents

d) Servants and dependents.

 The perquisites for the purpose of valuation can be classified as falling into
two categories namely, those which are taxable in the case of all he employees and
those which are taxable in the hands of specified employees. These perquisites are :

< Residential accommodation.

< Free or concessional education.

< Interest-free or concessional loans.

< Æse of employer͛s movable assets.

< Transfer of employer͛s movable assets.

< Domestic servants.

< Supply of gas, water, electricity.