Perquisites and Taxable Benefits

Salary & HR

Perquisites (perks) are non-cash benefits provided by employers. Some are fully taxable (company car, club membership, ESOP), some partially exempt (phone reimbursement, meals), and some fully exempt (medical insurance premium, laptop for official use). Optimising perquisite structure can save Rs 30,000-80,000 annually in tax.

In detail

Tax-free perquisites:nHealth insurance premium paid by employer: tax-free (no cap)nLaptop/computer for official use: tax-freenSubscriptions to professional journals: tax-freenTransportation by employer-owned vehicle for office purposes: tax-free (fuel card for personal use: taxable)nnTaxable perquisites:nCompany-provided car for personal use: Rs 1,800-2,400/month taxable (based on engine size)nRent-free accommodation: 7.5-15% of salary deemed perquisitenClub membership for personal use: fair value taxablenESOP exercise: fair value - exercise price taxable as perquisitennPartially exempt:nMeals provided in office canteen: exempt up to Rs 50/mealnGift vouchers from employer: up to Rs 5,000/year exempt

Formula

Car perquisite (personal use, company car):nEngine = 1.6L: Rs 2,400/month + driver salary if providednnRent-free accommodation perquisite:nGovernment employee: 7.5-15% of salarynOther employer: fair rent or 15% of salary (whichever lower)

Real-life example

🇮🇳 India example

Arjun's company perquisite package: laptop Rs 80K (tax-free), health insurance Rs 50K (tax-free), company car (1.5L engine) personal use Rs 1,800/month = Rs 21,600/year taxable perquisite, club membership Rs 60K/year (fully taxable). Total taxable perquisite: Rs 81,600. At 30% bracket: Rs 24,480 extra tax. Counter: company gives phone allowance instead of car, uses expense reimbursement model. Could reduce taxable perquisite to Rs 40K, saving Rs 12,000/year tax.

Frequently asked questions

Are medical reimbursements taxable after the new tax regime? ▼
Under the new tax regime (default): no special exemption for medical reimbursements. Under the old tax regime: Rs 15,000 medical reimbursement was exempt per year. Since most companies now structure under new regime defaults: medical reimbursements are taxable. Health insurance premium paid by employer: still tax-free under both regimes (it's insurance, not reimbursement).