Allowance Vs Perquisites

Tax queries 45111 views 6 replies

Can any one briefly explain me the difference between Allowance & Perquisites with suitable example.

Thanks in advance

Replies (6)

Allowance are provided only in cash whereas Perquisites can be either provided in cash or in kind

 

Allowances are fixed whereas same is not the case in perquisites(depends on expenditure)

PERQUISITES are the non-cash benefits, which an employee receives from his employer during the course of employment. The main important difference between the allowance and the perquisites is that the allowance are received by the employee in his hands and then they are spent, where as in the case of perquisites the money is not received, it is only the advantage that is received. E.g. free car given to the employee for his personal as well as official use by the employer is an example of perquisite because the employee does not receive any money but he gets a non-monetary benefit of using the car.

ALLOWANCE are the amounts given by the employer to the employee for carrying out the job responsibilities in an efficient manner. E.g. an airhostess is given a kit allowance and a wardrobe allowance so that she can carry out her duties properly and stay beautiful which is a requirement of her job. Similarly sales man is given a traveling allowance because it is the requirement of the job that he should travel extensively for procuring business.

Read more: https://wiki.answers.com/Q/Difference_between_perquisites_and_allowance_related_to_income#ixzz1K4FfJB2Y

is life insurance premium paid by employer on behalf of employee, a allowance or perquisites?

It is a taxable perquisite. Any sum payable by the employer to effect an assurance on the life of the employee or to effect a contract of annuity(life insurance) is a taxable perquisite. Source : students journal vol 22, april 2019 edition, Special issue on Income Tax Law.

life insurance premium paid by employer on behalf of employee is treated as taxable perquisite in the hands of the employee.the value of the perquisite is to be included in the gross salary of the employee for income tax calculation.


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