Every salaried individual is entitled to perquisites or perks. It is defined as any casual emolument, fee or profit, attached to an office or position in addition to the salary or wages.  In other words perquisites are benefits in addition to normal salary to which employee has a right by virtue of his employment. Some of these perquisites received by an employee are exempt from income tax as per the Income Tax Act, 1961(the Act) which are described below:

• Medical facility and reimbursement: Any medical facility and reimbursement of medical expenses to the extent of Rs. 15000 per year as per the Act.

However, where the assessee suffers any injury during the employment and the employer reimburses the medical expenses, such reimbursement is not perquisite as it is the duty of the employer to provide for such expenses.

• Refreshments: Any refreshment provided to the employees during office hours at the place of work.
• Free Meal: Free meal provided by the employer during the working/business hours or through paid non transferrable (usable only at eating joints) vouchers if value thereof in either case does not exceed Rs. 50 per meal. Further free meals provided during working hours in a remote area or an offshore installation is also exempt from income tax.
• Training of employees: Any expenditure incurred by the employer, for providing training to the employees would not be taxable because this enables the employees to perform their services more efficiently.
• 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.
• Employer’s 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.
• Insurance: All medical insurance payments made under a scheme framed by the GIC or any other insurer approved by the IRDA, whether paid directly or reimbursed to the employees shall not be treated as taxable perquisite.
• Telephone Bills: Telephone bills of the telephone installed at the residence of the employee for official 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.
• Loans to employees: Interest free / concessional loan of an amount not exceeding Rs. 20,000 provided by the employer to his employees is not a taxable perquisite.
• 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.
• 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.
• Rent free House: Rent free official residence and conveyance facilities provided to a Judge of a High Court/Supreme Court are not a taxable perquisite.

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