Hi,
What is the process of taxing perquisites? who pays the taxes?
Perquisites are benefits received by a person as a result of his/her official position and are over and above the salary or wages. These fringe benefits or perquisites can be taxable or non-taxable depending upon their nature.
A lot of benefits and perks which come in addition to an individual’s salary are grouped under fringe benefits or perks. These components are taxed separately from the employer’s account so as to maintain transparency and accountability.
According to the Finance Act, 2005, perquisites are taxed by the government in case these perks are provided or are deemed to be provided to employees by employers. The rate at which perquisites are taxed is 30% of the value of fringe benefits.
The perquisite tax is paid by the employer who furnishes these fringe benefits to employees. It can be a company, a firm, an association of persons or body of individuals.