Perquisites Element for India

Perquisites include the taxable monetary and non-monetary benefits provided by an employer in addition to the employee's salary.

Monetary perquisites are benefits provided in the form of money or cash. For example, reimbursement of gas or electricity bill. The amount reimbursed is a monetary perquisite and is added directly to the taxable income of the employee.

Nonmonetary perquisites are benefits provided in kind. For example, accommodation provided to employee. For nonmonetary perquisites, the value of perquisites is determined first and then the taxation rules are applied.

According to the Income Tax Act of India, here are the different taxable perquisites employers provide:

Perquisite Type	Values
Company Accomodation	Owned or leased Furnished or unfurnished Own furniture or rental furniture Hotel accommodation
Interest Free or Concessional Loan	Loan type Loan amount Interest rate Note: Create the statutory rates for concessional loan processing as required in your organization. This is not seeded in India Payroll. Loan duration Outstanding balance
Motor Car Perquisite	Owned or hired by the employer Owned by the employee Expenses by employer or employee Chauffer
Usage of Movable Assets	Laptop or computer Other assets owned or hired by the employer
Transfer of Movable Assets	Computer, laptop or other electronic item. Motor car Other movable assets
Free Or Concessional Education	Relationship (child or other) Cost to employer Amount recovered from employee
Credit cards and club expenditure	Cost to employer Expenditure for official purposes Amount paid by the employee
Employee Stock Options	Date of exercise Fair market value Number of shares Amount paid by the employee
Employer Contributions	Employer contributions to PF, Superannuation and NPS
Other Perquisites	Cost to employer Amount recovered from employee

Other perquisites include gift vouchers, services of domestic servant, gas, electricity and water, transport benefit and travelling , touring and accommodation.

The taxable value computation for each perquisite differs based on the perquisite type. The information required for the taxable value computation also varies based on the perquisite type. The input values which capture the perquisite details differ based on its perquisite type, the formula calculation logic is also different but all perquisites have a common result which is the taxable value of the perquisite. This value is added to the Value of Perquisites (Salary under Section 17 – 2) for computing the taxable salary for the employee.

When you create the perquisite as a recurring element, you can project the annual taxable value based on the remaining pay periods in financial year and the taxable value computed till date (YTD).

Create a Perquisite Element

Here's how you can create a perquisite element:

Note: The product offering needs to be set to India before creating the Perquisites element template.

1. From your Home page, navigate to My Client Groups > Show More.

2. Under Payroll, click Elements and click Create in the Elements page.

3. Select the primary classification Perquisites.

   The secondary classification is optional.

4. The Category is set to Standard by default.

5. On the Basic Information page, specify the name. You can use the default values for the remaining fields.

6. Click Next. On the Additional Details page, select the required options in Perquisite Rules, as shown in this table:

   Perquisite Rules

   Field	Value
   Perquisite Name	Select a perquisite name from one of the options.
   Perquisite Category	Select Monetary or Non-Monetary.
   Project Taxable Value	Select this option to project the Perquisite value for the remaining pay periods and the Annual value for Taxable Income under Section 17 (2) will be determined.

7. In Special Rules, select the required options for proration and retroactive changes and click Next .

8. Review all your specified choices in the Review page. Click Submit

9. After the element is created, create the eligibility record rule for the Perquisites element.

Note: Repeat the above steps to create all the required perquisite element templates.

Set Up Concessional Loan Processing Element

Here are the steps to setup the concessional loan processing element:

1. Configure outstanding balance on the loan

   When you create the perquisite element for Concessional Loan, a balance is created with the below naming convention base element name for the concessional loan balance. This balance needs the input from the custom loan deduction element to get the balance of the concessional loan availed by the employee.

2. Set up the Statutory Tax Rate

   The statutory tax is subject to change periodically. As a payroll administrator, you need to configure these rates. Hence the value definitions are seeded without any ranges.

   Note: Upload the statutory interest rates for your organization, to compute the concessional rates. You can upload the rates for all the loan types using HDL.

3. The From value and To value in the calculation values is the Loan Principal Amount.