Perquisite Tax
Also known as: Benefit Tax, Perks Tax
Tax on employment benefits valued in money, including ESOP exercise gains and RSU vesting, taxed as salary income.
Detailed Explanation
Perquisite tax applies to employment benefits that can be valued in money. For ESOPs, perquisite = FMV at exercise minus exercise price. For RSUs, perquisite = FMV at vesting. This income is added to salary, taxed at slab rates, and subject to TDS by the employer. Perquisite tax is due even without actual cash receipt.
Related Calculators
Related Terms
ESOP
Employee Stock Option Plan - A benefit plan giving employees the right to buy company shares at a predetermined exercise price.
RSU
Restricted Stock Units - Company shares granted to employees that vest over time and are taxed as salary when vested.
FMV
Fair Market Value - The price at which shares would trade between willing buyers and sellers in an open market.
TDS
Tax Deducted at Source - Tax collected by the payer before making payment to the payee.
Exercise
The act of purchasing ESOP shares by paying the exercise price, triggering perquisite tax liability.
Vesting
The process by which employees earn rights to ESOPs or RSUs over time, typically following a predefined schedule.