Tax Free Perquisites In Indian Tax System

• Medical facility: Any medical facility provided by the employer to the employee and his family members in a hospital, dispensary or a nursing home maintained by the employer.
• Medical reimbursement: Any medical expenses reimbursed by the employer for the treatment of his employee and his family members in an approved Hospital subject to maximum of Rs.10,000 per annum upto assessment year 1998-99. The limit of Rs.10,000 has been raised to Rs.15,000 per annum w.e.f. assessment year 1999-2000.
• Refreshments: Any refreshment provided to the employees during office hours at the place of work.
• Subsidised lunch or dinner provided by the employer: When lunch or dinner is provided at subsidised rates i.e. the employer charges some amount for the lunch or dinner then only it is tax-free perquisite.
• Recreational facilities: Any recreational facility provided to a group of employees by the employer is not taxable. These should not be resricted to only a few employees.
• Telephone Bills: Telephone bills of the telephone installed at the residence of the employee for offiicial purposes , if paid/reimbursed by the employer, is not a taxable perquisite even if such telephone is used for official as well as personal benefit of the employee.
• Goods sold by the employer at a concessional rate to his employees: When the employer sells the goods being manufactured by him to his employees at concessional rates, it is not a taxable perquisite e.g. a company, manufacturing fans, sells the fans to its employees at concessional rates, the concession given to the employees shall not be taxable. However, if the employer sells other goods to the employees at a value lower than the market value of the goods, the benefit given to the employee is taxable.
• Insurance: Any portion of the premia paid by an employer to effect or to keep in force an insurance on the health of the employee under an approved scheme. This covers reimbursement of the expense incurred by the employee for schemes approved under section 80D also.
• Loans to employees: If the employer gives a loan to an employee either without interest or at a concessional rate of interest for construction or purchase of a house or for a conveyance, then the benefit of interest availed of by the employee would not be taxable.
• Transportation facilities: If an employer, engaged in the business of transport, provides transport facilities to its employees and his family members either free of cost or at concessional rate then it would not be a taxable perquisite. For example, free passes provided by the Indian Railways to its employees are not taxable in the hands of the employees.
• Perquisites provided outside India: Perquisites provided by the Government to its employees, who are citizen of India for rendering services outside India, are not taxable.
• Training of employees: Any expenditure incurred by the employer, for providing training to the employees or by way of payment of fees of refresher management courses attended by the employee, would not be taxable because these enable the employees to perform their services more efficiently.
• Rent free House: Rent free official residence and conveyance facilities provided to a Judge of a High Court/Supreme Court is not a taxable perquisite.
• Residence to officials of Parliament etc.: Rent free furnished residence (including maintenance thereof) provided to an officer of the Parliament, a Union Minister or Leader of Opposition in Parliament, is not a taxable perquisite.
• Employers contribution: Employers contribution to pension, deferred annuity scheme and staff group insurance scheme of employees, is not a taxable perquisite in the hands of employees.