Perquisites which are Taxable in the hands of All Categories of Employees

Under Section 17(2) of the Income Tax Act, 1961, certain perquisites are taxable for all employees, regardless of their designation or salary level. Below is a detailed breakdown of these universally taxable perquisites, along with their valuation rules and examples:

1. Rent-Free or Concessional Accommodation

• Taxable Value:
  • For non-government employees:
    • 15% of salary(cities with population >25 lakh)
    • 10% of salary(10–25 lakh population)
    • 5% of salary(<10 lakh population)
    • Lower of the above or actual rent paid by the employer.
  • For government employees: Based on license fees minus rent paid by the employee .
• Furnished accommodation: Add 10% of furniture cost(if owned) or actual rent (if leased) .

2. Employer-Paid Obligations

• Examples:
  • School fees of employee’s children.
  • Income tax paid by the employer on behalf of the employee.
  • Utility bills (electricity, water, gas) reimbursed by the employer .
• Taxable Value: Actual amount paid by the employer .

3. Interest-Free or Concessional Loans

• Taxable Value: Difference between SBI’s lending rateand the interest charged by the employer .
• Exception: Loans up to ₹20,000or for medical treatment (Rule 3A) are exempt .

4. Company-Owned Vehicles for Personal Use

• Taxable Value:
  • Small cars (≤1.6L engine): ₹1,800/month + ₹900 for driver.
  • Large cars (>1.6L engine): ₹2,400/month + ₹900 for driver .
• Employee-owned cars: Taxable if employer reimburses running costs for personal use .

5. Gifts/Vouchers Exceeding ₹5,000

• Taxable Value: Fair market value of gifts (e.g., festival vouchers, electronics) exceeding ₹5,000/year .

6. Club Memberships

• Taxable Value: Actual cost borne by the employer (e.g., gym, golf club) .

7. Domestic Servant Allowances

• Taxable Value: Salary paid by the employer for servants (e.g., gardener, sweeper) .

8. Stock Options (ESOPs/Sweat Equity)

• Taxable Value: Difference between market price and concessional rate at allotment .

9. Employer Contributions Exceeding ₹7.5 Lakh

• Taxable Value: Employer’s PF/NPS/superannuation contributions beyond ₹7.5 lakh/year .

10. Free Meals (Beyond Exempt Limits)

• Taxable Value: Meals exceeding ₹50/meal(unless provided during office hours) .