MANAGEMENT

Detailed explanation-1: -According to the Finance Act, 2005, perquisites are taxed by the government in case these perks are provided or are deemed to be provided to employees by employers. The rate at which perquisites are taxed is 30% of the value of fringe benefits.

Detailed explanation-2: -“Perquisite” is defined in the section 17(2) of the Income tax Act as including: (i) Value of rent-free/accommodation provided by the employer. (ii) Value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer.

Detailed explanation-3: -An insurance premium paid by an employer on an accident policy taken out for the employee is a tax-free perquisite. Also, employers contribution to the superannuation fund of the employee provided such contribution does not exceed Rs. 1, 50, 000 per employee per year can be treated as a tax-free perquisite.

Detailed explanation-4: -The Finance Act, 2005 states – Perquisites will be taxed by the government when such benefits have been provided or are considered to have been provided to employees by employers. Ideally, perquisites are taxed at the rate of 30% of the entire value of the availed fringe benefits.