Perquisite section

Perquisite:

Section 17(2) of the Income Tax Act in India pertains to the computation of an employee's income. It deals with the inclusion of certain perquisites or benefits provided to employees by their employers in their taxable income.

The following are perquisites as per Section 17(2):

1. Any accommodation (a building in which someone may live or stay) provided by the employer.
2. Travel expenditure.
3. The value of any other fringe benefits (insurance benefits, social security, etc.)
4. Any sum payable by the employer, whether directly or through a fund other than a recognized provident fund (RPF) or an approved superannuation fund, to effect an assurance on the life of the assessee or to effect a contract for an annuity.

Rules for the valuation of perquisites under Section 17(2):

1. Value of Furnished RPF:
Central and State Government Employee- License fees for the house are determined and reduced by the rent paid by the individual.
Non-Government Employee- The perquisite value is 15% in cities with a population above 25 lakh.
The perquisite value is 10% in cities with a population between 10-25 lakh.
The perquisite value is 7.5% in cities with a population of less than 10 lakh.
The value of the perquisite is the rent paid by the organization or 15% of the salary, whichever is less.


2. Accommodation in Hotel- The value of the perquisite is 24% of salary or the charges paid to the hotel, whichever is less.
3. Company car or vehicle: The value of a company car or vehicle provided by an employer is based on the actual cost.