Definition
Perquisites (Perks)
Perquisites are non-cash benefits or amenities provided by an employer — like company car, accommodation or interest-free loans — that are valued and taxed as part of salary.
Perquisites ('perks') are benefits beyond cash salary, such as rent-free or concessional accommodation, a company car for personal use, free or subsidised meals beyond limits, employer-provided interest-free loans, club memberships and ESOP/RSU benefits.
The Income Tax rules prescribe valuation methods for each perk, and the computed value is added to your taxable salary, with the employer deducting TDS. Some perks have specific exemptions or concessional valuation.
Understanding perk valuation matters because seemingly 'free' benefits can increase your taxable income. The value of taxable perquisites is reflected in your Form 16 Part B.
Related terms
- LTALeave Travel Allowance is a salary component that can be tax-exempt for the cost of travel within India undertaken on leave, subject to conditions and block-year limits.
- ESOP TaxationEmployee Stock Options are taxed in India at two stages: as a perquisite on exercise based on the share value, and as capital gains when the shares are eventually sold.
- Form 16 (Parts A & B)Form 16 is the TDS certificate your employer issues for salary, with Part A showing tax deducted and deposited, and Part B detailing the salary breakup and deductions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.