What is the difference between perquisites and allowance?

Allowances: A financial benefit offered to an employee over and above their regular salary. These benefits are provided to cover expenses that employees may incur while on the job or because of it. Perquisites: A perquisite is a benefit offered to an employee on account of their job or position.

What are examples of perquisites?

Some of the perquisites that are taxable in nature are rent-free accommodation, supply of gas, water and electricity, professional tax of employee, reimbursement of medical expense, and salary of servant employed by employee.

What do u mean by perquisites?

“Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. “Perquisite” is defined in the section 17(2) of the Income tax Act as including: (i) Value of rent-free/accommodation provided by the employer.

What is the difference between an allowance and a reimbursement?

A reimbursement is a payment made by one person to repay another person for amounts spent. An amount constitutes a reimbursement where the amount is fully accounted for by the person receiving the payment (i.e., evidenced by supporting vouchers or records). Consequently, an allowance is not a reimbursement.

What is salary and allowances?

Any monetary benefit offered by the employer to its employees for meeting expenditures, over and above the basic salary are known as Salary Allowances. The employers offer various kinds of additional benefits in monetary terms to their employees over and above the basic salary, which are known as salary allowances.

What do you mean by allowance in income tax?

What is Allowance? An allowance is a fixed amount of money received by a salaried employee from his employer to meet a particular type of expenditure over and above salary. For example, companies provide overtime allowance to employees if they work more than fixed working hours.

What is allowance in income tax?

As per the Income Tax Act, allowances are the monetary benefits given by the employer to the employee over and above the basic salary for meeting various expenses.

Is medical allowance a perquisite?

What is the Eligibility to Claim Medical Expenditure? Under the Income Tax Act, specific conditions have been prescribed so that such expenditure is not considered as a perquisite in the hands of the employee: Employee should have spent the amount on medical treatment.

How many types of perquisites are there?

The Three types of perquisites have been identified under the Indian Income Tax Act: Perquisites taxable for all categories of employees: They are: Rent free house provided by the employer, House provided at concessional rent, Insurance premium paid on the life of the employee. The value of any other fringe benefit.

Is an allowance an expense?

However, they are two distinct concepts: the per day allowance is a fixed amount that a company gives its employees up front to cover the expenses for certain items, while an expense reimbursement is simply a matter of returning the money to the employee that they have spent on specific items.

Does allowance count as income?

There are no federal income tax consequences to your minor child if you give him or her an allowance. Similarly, there are no federal income tax consequences to you, as a parent, for giving an allowance to your minor child. But for now, it’s income tax free for federal purposes.

What is type of allowances?

In terms of taxability there are three types of allowances; Taxable Allowance, it is the Allowance which is fully taxable. Partially Taxable Allowance is the Allowance in which some part is exempt, and some part is taxable. Non-Taxable Allowance, is the Allowance which is fully exempt from tax.

What is perquisites & allowances?

Perquisites & allowance PERQUISITES AND ALLOWANCE Meaning: Fixed monetary payments for a specific purpose is known as allowance. Employer provides to employee a fixed sum of money and also specifies the purpose for which it has to be used. TYPES OF ALLOWANCES 1. Fully exempted allowances  These i. allowance are not at all taxable.

What do you mean by allowances?

1. PERQUISITES AND ALLOWANCE 2. Meaning: Fixed monetary payments for a specific purpose is known as allowance. Employer provides to employee a fixed sum of money and also specifies the purpose for which it has to be used. 3. TYPES OF ALLOWANCES 1.

What does perquisit stand for?

Perquisites & allowance. 10. PERQUISITE Meaning: It is defined as any casual emolument, free or profit attached to an office or position, in additional to salaries or wages. It is simply known as non- monetary benefits provided by an employer to an employee.

What are perquisites under Income Tax Act?

As per Section 17 (2) of the Income Tax Act, 1961 “Perquisites” includes: Value of rent-free or concessional rate of rental accommodation provided to the employee by the employer. Any sum paid by the employer in respect of an obligation which was actually payable to the employee