Perquisites [Sec.

17(2)]:
The term “perquisite” is defined in Webster’s New International Dictionary
as “a gain or profit incidentally made from employment in addition to
regular salary or wage, especially one of a kind expected or promised”.
Similarly in Murray’s English Dictionary, it is defined as “any casual
emolument or benefit attached to an office or position in addition to salary or
wages”. The Chambers Twentieth Century Dictionary defines “perquisite” as
“property acquired otherwise than by inheritance: a casual: anything left
over that a servant or other has by custom a right to keep: a tip expected
upon some occasion: emoluments: something regarded as falling to one by
right”.
Thus, the phrase “perquisite” signifies some benefit in addition to the
amount that may be legally due by way of contract for services rendered.

The following propositions should also be kept in view:

• Personal benefit-“Perquisite” denotes something that benefits a man

by going into his own pocket; it does not, however, cover a mere
reimbursement of necessary expenses incurred by him.

• Cash or kind- It may be provided in cash or in kind.

• Should be provided by employer- Perquisites are included in salary

income only if they are received by an employee from his employer
(maybe former, present or prospective). Perquisites, received from a
person other than employer, are taxable under the head “Profits and
gains of business or profession” or “Income from other sources”.

• Enforceable right- A benefit or advantage would be taxable as

perquisite only if it has a legal origin. As an authorized advantage
taken by an employee without his employer’s authority would create a
legal obligation to restore such advantage, it would not amount to
“perquisite” taxable under the Act On the other hand, if the benefit has
been conferred unilaterally without the aid of an agreement between
the parties, the employee can be taxed under perquisite. It is not
 necessary that the benefit should have been received under an
enforceable right.

• Personal accident policy- Premium paid by employer towards

personal accident policy of employee is not taxable as perquisite.

• Pensionary deferred annuity benefits- Payments made by an employer

to provide deferred annuity benefits to his employees are taxable as
perquisites only when a vested interest accrues to the employee.

• Personal advantage during employment- Perquisites are taxable under

the head “Salaries” only if they are:
(a) Allowed by an employer to his employee,
(b) allowed during the continuance of employment,
(c) Directly dependent upon services,
(d) Resulting in the nature of personal advantage to the employee, and
(e) Derived by virtue to employer’s authority.
It is not necessary that recurring and regular receipt alone is a
Perquisite. Even a casual and non-recurring receipt can be perquisite if
The aforesaid conditions are satisfied.

“Perquisite” as defined by the Act-

A combined reading of section 15 and 17 suggests that salary
would include, among other things, perquisites. Section 17(2) gives an
inclusive definition of perquisite, as including:

a. the value of rent free accommodation provided to the assessee by his

employer [sec. 17(2)(i)];
b. the value of any concession in the matter of rent respecting any
accommodation provided to the asessee by his employer [sec.
17(2)(ii)[;
c. the value of any benefit or amenity granted or provided free of cost or
at concessional rate in any of the following cases:

i. by a company to an employee who is a director thereof;

ii. by a company to an employee, being a person who h
substantial interest in the company;
iii. by an employer (including a company) to an employee
to whom provision of (i) and (ii) above do not apply
 and whose income under the head “Salaries” exclusive
of the value of all benefits or amenities not provided for
by way of monetary benefits, exceeds Rs. 50,000 [sec.
17(2)(iii)];
d. any sum paid by the employer in respect of any obligation which but
For such payment would have been payable by the assessee [sec.
17(2) (IV)];
e. any sum payable by the employer, whether directly or through a fund
other than a recognized provident fund or approved superannuation
fund or a deposit-linked insurance fund, to effect an assurance on the
life of the assessee or to effect a contract for an annuity [sec.
17(2)(v)];
f. The value of any other fringe benefit or amenity as may be prescribe
[sec. 17(2) (VI)].