Question 1:- What is meant by prerequisite? What are tax-free benefits?
Meaning of Perquisites:- Perquisites means such facilities and benefits which are received by an employee from his employer in addition to salary in the form of such goods or services facility which can be valued in money. Such facilities or benefits may be provided by the employer to his employees voluntarily or under any contract.
Tax-free Perquisites
These are those facilities that are received by the employee from his employer but are exempt from tax i.e. are not included in the income of salary. The following perquisites are tax-free for every employee
Medical facilities – If any medical facility is provided to the employee by the employer or medical expenses have been reimbursed, then such facility will be completely taxed free but if the treatment is done in a private nursing home then reimbursement up to Rs.15,000 to the employee will be exempt from tax. , the rest will be taxable.
Breakfast – Free breakfast provided to the employee by the employer during office hours or Japan Constitution shall be completely tax-free.
Telephone facilities- Free telephone or mobile phone facility received by the employee at his home from the employer shall be completely tax-free, even if the phone is partly used by the employee.
Recreational facilities- Free entertainment facilities like sports, cinema, etc. provided by the employer to his employee are exempt from tax.
Refresher Course- If any expenditure or fee is paid by the employer for conducting a refresher course or training for the employee, then such expenditure incurred by the employer will be a tax-free perquisite, as it benefits the employer.
Computer/laptop facility provided to the employee for office or personal use.
20,000 up to the amount of loan given at interest-free or concessional rates.
Free education facility provided to the employee’s children in an educational institution run by the employer, (if the cost of his education does not exceed Rs.1,000 per month per child.)
Allowances and perquisites received abroad – Allowances and perquisites given by the Government of India to an Indian citizen while serving outside India will be exempt from tax.
High court and Supreme Court judges get residence, and ride facilities without rent will be tax-free. The facility of rent-free accommodation to the Union Minister, Designated Officer of Parliament, and Leader of the Opposition in Parliament, etc., including its maintenance.
The facility of free conveyance provided by the employer to his employees for commuting from his residence to his workplace and back home from there is exempt from tax.
The contribution made by the employer under the group insurance scheme will be tax-free.
Hotel accommodation for a maximum period of 15 days on the transfer of the employee.
Goods manufactured by the employer, are sold by the employer to his employees at a discounted rate.
Issuance of shares, debentures, or warrants by the employer company to its employees free of cost or at concessional rates under the Employees’ Stock Scheme.
Transfer of property that is thirty years old or more – If the employer has transferred to the employee any property which has become 10 years or elder
No part of such transfer is taxable, but such property does not include computers, electronic goods, and cars.
Leave Travel Assistance- An employee can get Leave Travel Assistance tax-free not more than twice in four years.
Income-tax on perquisites- If income tax is paid by the employer on the perquisites given to the employee, then such amount shall be exempt from tax.