Tax-Free Perquisites in India for employees
What are Perquisites?
In addition to the cash component of salary, the employees are also given non-cash benefits by the employer. These non-cash benefits are generally known as ‘Perquisites’. Perquisites provided by the employer to an employee are subject to tax under the head “Income under head Salary”. But not all the perquisites are taxable, some perquisites are specifically exempted from income tax. You would be definitely interested in knowing such perquisites for better tax planning and reducing the tax burden. In this article, we are providing the types of perquisites that are tax-free under the Income Tax Act, 1961.
List of Tax-Free Perquisites in India
|
Nature of Perquisite |
Description & Exemption Limit |
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Medical Facility |
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Recreational Facilities |
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Training of Employees |
Any expenditure incurred by the employer, for providing training to the employees or by way of payment of fees or refresher courses attended by the employees shall be tax-free. |
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Telephone & Laptops |
|
|
Contribution to Provident Fund or Superannuation Fund |
A contribution made by the employer in a recognized provident fund in the scheme referred to in section 80CCD (1), and in an approved superannuation fund up to Rs. 1,50,000. |
|
Food & Beverage |
Free food and non-alcoholic beverages provided by an employer to an employee during working hours:
shall be tax-free provided that the value of such meal is not more than Rs. 50. |
|
Loans to Employees |
Loans to employees are entirely tax-free in two cases:
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Accidental Insurance Premium |
Premium paid by the employer on an accident policy taken out by it in respect of the employee shall be a tax-free perquisite. |
|
Perquisites provided outside India |
Perquisites provided by the Government to its employees, who are citizens of India for rendering services outside India are tax-free. |
|
Rent Free House/ Conveyance facility |
Rent Free official residence and conveyance facilities provided to a Judge of the Supreme Court or High Court are tax-free. |
|
Residence to officials of Parliament |
Rent Free furnished residence (including maintenance thereof) provided to an officer of Parliament, a Union Minister, or Leader of Opposition in Parliament, is not taxable. |
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Accommodation provided in a remote area |
The accommodation provided by the employer shall be tax-free if the accommodation is provided to an employee working at a mining site or an onshore oil exploration site or a dam site or a project execution site, a power generation site, or an offshore site that is being of a temporary nature and having plinth area which is not more than 800 square feet, and is located not less than 8 kilometers distance away from the local limits of a municipality or a cantonment board or is located in a remote area. |
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Education Facilities for employee’s children |
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Leave Travel Concession (LTC) |
The employee shall be entitled to exemption under section 10(5) in respect of the value of the travel concession or assistance that is received by or due to him from his employer, in connection with:
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Tax paid by the employer on non-monetary perquisites |
Tax paid by the employer on non-monetary perquisites of the employee shall be exempt in the hands of the employee. |
Conclusion:
The above list of tax-free perquisites will help you in planning your salary package. You can reduce your tax burden by systematically arranging the proportion of cash and the non-cash component of the salary thereby reducing net income-tax payable while income tax return filing.
