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Allowances vs. Perquisites — What's the Difference?

By Tayyaba Rehman — Published on October 6, 2023
Allowances are fixed monetary benefits given regularly, while perquisites are non-monetary benefits provided to employees.
Allowances vs. Perquisites — What's the Difference?

Difference Between Allowances and Perquisites


Key Differences

Allowances present themselves as fixed, often monetary, benefits provided to employees in addition to their salary to meet specific services or requirements. Contrarily, Perquisites, diverge in their essence as they encapsulate non-monetary benefits or privileges provided to employees, often considering their position or status within an organization.
An aspect to understand about Allowances is that they are typically predefined, structured, and often monetary in nature, serving to cater to particular expenses or needs that an employee may incur. Perquisites often nestle themselves in a more varied and dynamic form, providing benefits that could range from company cars to housing facilities, not strictly adhering to a monetary format, and may be significantly influenced by an employee's role or designation.
The encompassing nature of Allowances predominantly pivots on a universal applicability, wherein they are generally provided to all employees, adhering to a more egalitarian distribution. Diametrically, Perquisites tend to lean towards a selective dissemination, wherein specific roles or designations may receive particular perquisites, underscoring a positional or hierarchical distinction in their distribution.
In terms of tax implications, Allowances can be fully taxable, partially taxable, or entirely exempt, depending on the jurisdiction and the type of allowance being provided. Perquisites, however, are typically taxable, and the valuation may be done as per applicable tax laws, often considering the monetary value or deemed value of the benefit provided.
Inherently, Allowances and Perquisites function to augment the compensation structure of employees, yet they diverge in their form, substance, and distribution, providing distinct modalities and impacts on employee compensation and satisfaction, while also harboring unique tax implications and structures.

Comparison Chart


Monetary benefits
Non-monetary benefits


Generally egalitarian and structured
Often selective and role-specific


Can be fully/partially taxable or exempt
Typically taxable on provided/deemed value


Universally applicable to all employees
Specific to roles or positions


Fixed and structured
Varied and dynamic

Compare with Definitions


Fixed, often monetary, benefits provided to employees.
Travel allowances are given to cover commuting costs.


Non-monetary benefits or privileges provided to employees.
Executives often receive a company car as a perquisite.


May be subjected to varying degrees of tax implications.
The housing allowance is fully taxable as per regulations.


Can be varied in form and not strictly monetary.
Health club memberships might be a perquisite in some firms.


A predetermined sum paid to meet specific expenses.
The company offers a daily meal allowance.


Benefits influenced by an employee's role or designation.
Senior management may receive a housing perquisite.


Structured and uniformly distributed employee benefits.
All employees receive a mobile allowance for work calls.


Often subject to tax implications based on their value.
The value of a company-provided accommodation is taxable.


Financial benefits additional to the base salary.
The company provides an allowance for health expenses.


Perquisites may be selectively disseminated.
Access to exclusive clubs may be a perquisite for certain roles.


The act of allowing.


A payment, profit, or benefit received in addition to a regular wage or salary, especially when due or expected.


An amount that is allowed or granted
Consumed my weekly allowance of two eggs.


Something regarded or claimed as an exclusive right by virtue of one's social position or rank
"The family had the perquisites of the upper-middle class, employing a maid, a chauffeur-gardener, and an Irish Catholic nanny" (Ira Bruce Nadel).


Something, such as money, given at regular intervals or for a specific purpose
A travel allowance that covers hotel bills.


A gratuity; a tip.


A small amount of money regularly given to a child, often as payment for household chores.


Plural of perquisite


A price reduction, especially one granted in exchange for used merchandise
The dealer gave us an allowance on our old car.


To put on a fixed allowance
Cut expenses by strictly allowancing the sales representatives.


To dispense in fixed quantities; ration.


Plural of allowance

Common Curiosities

Are Allowances taxable?

Yes, Allowances can be fully taxable, partially taxable, or exempt, depending on the type and jurisdiction.

What is the key difference between Allowances and Perquisites?

Allowances are fixed, often monetary benefits, while Perquisites are non-monetary privileges or benefits.

Are Perquisites provided to all employees?

No, Perquisites are often selective and may be provided based on role or position.

Can Allowances be non-monetary?

Typically, Allowances are monetary, though the nature may vary based on company policies.

Can Perquisites be converted into a monetary form?

Yes, the monetary value of perquisites is often considered for tax purposes.

How are Allowances distributed among employees?

Allowances are generally distributed uniformly among employees, often as a fixed sum.

What is an example of a Perquisite?

A company car provided to an executive is an example of a perquisite.

Do Perquisites include insurance benefits?

Yes, insurance benefits can be considered a perquisite.

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Author Spotlight

Written by
Tayyaba Rehman
Tayyaba Rehman is a distinguished writer, currently serving as a primary contributor to As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.

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