Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Allowance Vs Perquisites

CA Jimmit D Mehta (Employed) (494 Points)

11 December 2008

Can any one briefly explain me the difference between Allowance & Perquisites with suitable example.

Thanks in advance

Reply
Follow
Share

6 Replies

Rakesh Aggarwal (Student) (100 Points)
Replied 11 December 2008

Allowance are provided only in cash whereas Perquisites can be either provided in cash or in kind

Upgrade to CAclubindia Pro. Subscribe Now!

Rakesh Aggarwal (Student) (100 Points)
Replied 11 December 2008

Allowances are fixed whereas same is not the case in perquisites(depends on expenditure)

adarsh (CA Aspirants) (88 Points)
Replied 20 April 2011

PERQUISITES are the non-cash benefits, which an employee receives from his employer during the course of employment. The main important difference between the allowance and the perquisites is that the allowance are received by the employee in his hands and then they are spent, where as in the case of perquisites the money is not received, it is only the advantage that is received. E.g. free car given to the employee for his personal as well as official use by the employer is an example of perquisite because the employee does not receive any money but he gets a non-monetary benefit of using the car.

ALLOWANCE are the amounts given by the employer to the employee for carrying out the job responsibilities in an efficient manner. E.g. an airhostess is given a kit allowance and a wardrobe allowance so that she can carry out her duties properly and stay beautiful which is a requirement of her job. Similarly sales man is given a traveling allowance because it is the requirement of the job that he should travel extensively for procuring business.

Read more: https://wiki.answers.com/Q/Difference_between_perquisites_and_allowance_related_to_income#ixzz1K4FfJB2Y

2 Like

benny (student) (28 Points)
Replied 02 March 2019

is life insurance premium paid by employer on behalf of employee, a allowance or perquisites?

Arun P D (2 Points)
Replied 15 June 2019

It is a taxable perquisite. Any sum payable by the employer to effect an assurance on the life of the employee or to effect a contract of annuity(life insurance) is a taxable perquisite. Source : students journal vol 22, april 2019 edition, Special issue on Income Tax Law.

Upgrade to CAclubindia Pro. Subscribe Now!

Ritik Chopra (student) (8128 Points)
Replied 11 March 2021

life insurance premium paid by employer on behalf of employee is treated as taxable perquisite in the hands of the employee.the value of the perquisite is to be included in the gross salary of the employee for income tax calculation.