## Perquisite vs Allowance
| Allowance | Perquisite |
|---|---|
| A fixed amount of money paid monthly to meet a particular expense (whether incurred or not). | A benefit or facility provided in kind, or expenses reimbursed/paid by the employer on behalf of the employee. |
| Example: Medical Allowance ₹2,000 p.m. | Example: Medical facility at company hospital, or medical bills paid by employer. |
## Why this distinction matters
- Allowances are taxed under Section 17(1)/(3) and may be exempt under Section 10(13A)/(14).
- Perquisites are taxed under Section 17(2) with their own valuation rules (Rule 3) and a separate list of exemptions.
## Categories of Perquisites in Syllabus
1. Medical Facilities – inside India / outside India distinction.
2. Education Facilities – for employee / children / other family members.
3. Leave Travel Concession (LTC) – Section 10(5) read with Rule 2B.
4. Food / Lunch / Refreshments.
5. (Other perquisites – car, RFA, ESOP, loans etc. covered separately in the chapter).