eKTP 71

Benefit-in-kind and Perquisites from Employment
Part 1 of 4 


1. Benefit-in-kind (BIK)

Section 13(1)(b) of the Income Tax Act, 1967
“… an amount equal to the value of use or enjoyment by the employee of any benefit or amenity (not being a benefit or amenity convertible into money) provided for the employee by or on behalf of his employer …”

  • Not convertible into money, cannot be sold, assigned or exchanged for cash

  • Gross income from employment

  • Provided by or on behalf of employer to be personally enjoyed by the employee

  • Taxable under Section 13(1)(b) of the Act

Types of BIK

  • Household servants, Gardener, Driver, Domestic Helper, Guard

  • Value of household furniture and fittings

  • Utilities bills (e.g. Lights, water, telephone and other utilities)

  • Mobile phone

  • Motorcar and petrol

  • Drivers

  • Club membership

     Tax exemption on BIK

Ascertainment of The Value Of BIK

Subsection 32(1) of the ITA 1967 provides that the value of BIK to be taken as gross income from an employment of an employee is an amount which is just and reasonable in the circumstances. Two methods may be used to determine the value of BIK provided to the employee by the employer. The methods are:

(i) The formula method, and
(ii)The prescribed value method.

Both the above method can be read from Public Ruling no. 3/2013

2. Perquisites from employment

Section 13(1)(a) of the Income Tax Act, 1967
“… gross income of an employee in respect of gains or profits from an employment includes any wages, salary, remuneration, leave pay, fee, commission, bonus, gratuity, perquisite or allowance (whether in money or otherwise) in respect of having or exercising the employment … “

  • Benefits in cash or kind convertible into money

  • Received from employer or third parties

  • Gross income from employment

  • Taxable under Section13(1)(a)

Types of perquisite

  • Pecuniary liability of employees paid by employer, such as income tax payment, electricity and water bills, telephone bills, car insurance premium, road tax, parking fees and car maintenance charges

  • Credit card facilities

  • Recreational club membership

  • Tuition or school fees of child

  • Insurance premiums

  • Gardener, driver, domestic help or guard

  • Scholarship

  • Waiver of loan or advance

  • Assets given free of charge or sold at discounted prices

  • Gift vouchers

  • Gift of personal computer

  • Excellent public service award

  • Professional subscriptions