Allowance Vs Perquisites

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.

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