What Are Perquisites?
Perquisites, commonly called perks, are non-cash benefits or facilities provided by an employer to an employee, in addition to regular salary — such as company accommodation, a company car, or interest-free loans — which carry a specific, often taxable, monetary value under Indian income tax law.
Common Types of Perquisites
- Rent-free or concessional company-provided accommodation
- Company car provided for personal use
- Interest-free or low-interest loans from the employer
- Employee Stock Option Plan (ESOP) benefits
- Club memberships and other employer-funded personal benefits
- Free or subsidized meals beyond specified exemption limits
Tax Treatment of Perquisites
Most perquisites are taxable as part of an employee's salary income, valued according to specific rules prescribed under the Income Tax Act, 1961 and reported through Form 12BA alongside Form 16 — though certain perquisites carry specific exemptions or concessional valuation methods.
Perquisites vs Allowances
Allowances are typically fixed monetary payments (like HRA or Special Allowance) included directly in salary. Perquisites are non-cash benefits or facilities — the employee doesn't receive cash but benefits from the value of the facility provided, which is still assessed for tax purposes.
Why HR Should Understand Perquisite Valuation Rules
- Incorrect valuation of perquisites can result in under- or over-reporting of taxable income, creating compliance risk.
- Perquisites are an important consideration in senior executive compensation structuring, where non-cash benefits often form a meaningful part of the overall package.
- Clear communication to employees about the taxable value of their perks helps avoid confusion during tax filing.
Perquisites (Perks): Frequently Asked Questions
Are all perquisites fully taxable?
How are perquisites reported for tax purposes?
This glossary entry is for general information and reflects common HR practice in India at the time of writing. Statutory thresholds, rates and deadlines change — verify against the latest official notifications or consult a qualified legal or tax advisor before acting.