Perquisites
mean any casual emoluments, fees or profit attached to an
office in addition to salary and wages. In simple words, it’s a personal
advantage. It does not cover a mere reimbursement of any expenditure incidental
to the
employment.
Download All in One Value of Perquisite U/s 17(2) [ All type of Value of Calculator U/s 17(2)
Like if
an employee is provided with a watchman for official use there is no personal
advantage to the employee, hence there is no perquisites. If the watchman is
provided for personal as well as official use, the value of the perquisites
only relating to personal use is taxable. Similarly if the travelling bills for
official duties are reimbursed to the employee, there is no advantage to the
assesse, so it is not a perquisite.
The
perquisites may be in cash or in kind or in the money or money’s worth and also
in amenities which are not convertible to the money.
All
cash allowance is included in the ordinary meaning of perquisites: - all cash
allowance is included and hence taxable under section 17(2) of income tax act. City compensatory allowance, bad
climate allowance, shift allowance and incentive bonus are included as
perquisites under section 17(2) of income tax act.
A
perquisite is taxable as salary only when it is provided by the employer during
the continuance of employment: - any perquisites allowed by a person other than
employer is taxable as income from
other sources.
For example tips received by
hotel waiters from customers are
taxable as income from other sources
Wide scope of the inclusive definition of perquisites: - the definition
of the perquisites is inclusive but not limited to them only. The scope of an
inclusive definition cannot be restricted only to those words which accrue in
definition, but with extend to many other things not mentioned in it.
Therefore, any other item not listed in the definition of perquisites will have
to be evaluated in accordance with the general and commercial meaning of the
word perquisites.
Section
17(2) of income tax perquisites includes.
1- Rent free accommodation under
section 17(2) 1
2- Accommodation in confessional rate of rent under section 17(2) 2
3- Any benefit or amenity to the
specified employee who is either a director of has a substantial interest in the company or whose income under salaries exceeds
Rs. 50000 under section 17(2)3
4- Obligation of the employee paid or
reimbursed by the employer under section 17(2)4
5- Any sum payable by the employer to
effect an assurance on the life of the assesse or to effect a contract of annuity under section 17(2) 5
6- Prescribed fringe benefits or amenity under
section 17(2)6
When an
employee receives ‘perquisites’ from his job, Form 12BA is provided by his
employer to the employee. Perquisites are the benefits derived from a job or a
position and these are in addition to salary already being paid to the
employee.
This form is basically a
detailed statement with information about perquisites, fringe benefits or
amenities and profits in lieu of salary. The Income Tax Act has set out
rules for calculation of monetary value of these perquisites. The value of
these payments is shown in the form and also the amount that is taxable for the
employee towards these perquisites.
Do
note that this is form is additional to the Form 16 you will receive from the
employer. Value of Perquisites u/s17(2) of the Income Tax Act is already
included in the Part B of your Form 16. The
TDS deducted on perquisites is also included in Form 16. Therefore Form 12BA is
an additional detail meant only for perquisites.
