Salary benefits & perquisites

Telephone and internet expenses paid or reimbursed by the employer are excluded from perquisite value.

Rule 3(7)(ix) proviso, Income-tax Rules

Where the employer engages domestic staff for you, their cost is your perquisite.

Rule 3(3), Income-tax Rules

Schooling provided in an employer-run institution is exempt only below a per-child monthly cost.

Rule 3(5), Income-tax Rules

A small monthly exemption per child, for up to two children — old regime only.

Rule 2BB(2), Income-tax Rules

A monthly hostel exemption per child, for up to two children — old regime only.

Rule 2BB(2), Income-tax Rules

The interest you did not pay is a perquisite, measured against a benchmark lending rate.

Income-tax Rules, 2026 (earlier Rule 3(7)(i), 1962)

Club facilities provided by the employer are taxable at cost, with a narrow official-use exception.

Rule 3(7)(vi), Income-tax Rules

Facilities offered uniformly at the employer's premises are excluded; individual memberships are taxable.

Rule 3(7)(vi), Income-tax Rules

The gain between fair market value and your exercise price is taxed as salary when shares are allotted.

Section 17(2)(vi), Income-tax Act

RSUs are taxed as a perquisite on vesting, with a nil or nominal exercise price.

Section 17(2)(vi), Income-tax Act

Shares issued for consideration other than cash are taxed on their fair market value when allotted.

Section 17(2)(vi), Income-tax Act

Cash-settled equity plans are ordinary salary, not share perquisites — taxed in full when paid.

Section 17(1), Income-tax Act

Meals or vouchers provided during working hours are exempt up to a per-meal limit, now in both tax regimes.

Rule 15(5)(a), Income-tax Rules, 2026 (earlier Rule 3(7)(iii), 1962)

Premium paid by your employer for group health cover is not treated as a perquisite.

Proviso to Section 17(2), Income-tax Act

Employer-funded check-ups and wellness benefits are generally taxable at cost unless they fall in an excluded medical category.

Proviso to Section 17(2), Income-tax Act

HRA is exempt to the extent of the least of three statutory limbs — old regime only.

Section 10(13A) and Rule 2A, Income-tax Rules

Allowances covering stays away from your base are exempt to the extent actually spent on duty.

Rule 2BB(1)(b), Income-tax Rules

Unfurnished accommodation provided free is valued as a percentage of salary that varies with city population.

Rule 3(1), Income-tax Rules

Where the employee pays some rent, the perquisite is the prescribed value reduced by the rent recovered.

Rule 3(1), Income-tax Rules

Furniture supplied with employer accommodation adds a separate amount on top of the accommodation value.

Rule 3(1), Income-tax Rules

Short stays in an employer guest house on duty are not a perquisite; personal use is.

Rule 3(1), Income-tax Rules

Fully exempt for Indian citizens who are government employees posted abroad; taxable for private employees.

Section 10(7), Income-tax Act

Allowances paid on deputation follow the purpose test: exempt to the extent they meet actual official expenditure.

Rule 2BB(1), Income-tax Rules

COLA on an overseas posting is taxable salary for private-sector employees; residency then decides where it is taxed.

Section 17(1) read with Section 6, Income-tax Act

Location-linked allowances carry small fixed monthly exemptions — old regime only.

Rule 2BB(2), Income-tax Rules

Gifts in kind are exempt up to a modest annual aggregate.

Income-tax Rules, 2026 (earlier Rule 3(7)(iv), 1962)

Exempt to the extent spent on purchasing and maintaining a uniform worn on duty — old regime only.

Rule 2BB(1)(f), Income-tax Rules

Exempt where a helper is actually engaged for official duties — old regime only.

Rule 2BB(1)(d), Income-tax Rules

Exempt to the extent spent on academic research and professional pursuits — old regime only.

Rule 2BB(1)(e), Income-tax Rules

Training paid for the employer's business purposes is not a taxable perquisite.

Rule 3(7)(ix), Income-tax Rules

Memberships required for your role are not a personal benefit; social memberships are.

Rule 3(7)(vi) and Rule 3(7)(ix), Income-tax Rules

Genuine transfer costs reimbursed against bills are not taxable; lump-sum allowances are.

Rule 2BB(1)(a), Income-tax Rules

Employer PF is tax-free within limits, but very large employer contributions become taxable.

Section 17(2)(vii) and (viia), Income-tax Act

Employer NPS is deductible under 80CCD(2) in both regimes, within a percentage-of-salary limit.

Section 80CCD(2), Income-tax Act

Employer superannuation contributions count toward the same aggregate retirement ceiling.

Section 17(2)(vii), Income-tax Act

Gratuity received on exit is exempt up to a lifetime ceiling.

Section 10(10), Income-tax Act

Leave encashed at retirement is exempt up to a ceiling; encashment during service is fully taxable.

Section 10(10AA), Income-tax Act

Extra provident fund contributions you choose to make, sharing the 80C umbrella and the interest-taxation rules.

Section 80C and Rule 9D, Income-tax Rules

Regular pension is taxed as salary; commuted pension is exempt within limits.

Section 10(10A), Income-tax Act

Equipment provided for work use carries no perquisite value while it remains the employer's asset.

Rule 3(7)(vii), Income-tax Rules

Domestic travel fare for you and your family is exempt twice in a four-year block — old regime only.

Section 10(5) and Rule 2B, Income-tax Rules

Conveyance granted to meet the cost of official travel remains exempt in both regimes.

Rule 2BB(1)(c), Income-tax Rules

Per-diem to meet ordinary daily charges while away on tour is exempt in both regimes.

Rule 2BB(1)(b), Income-tax Rules

Cost of travel on tour or transfer, including packing and transport of effects, is exempt in both regimes.

Rule 2BB(1)(a), Income-tax Rules

A monthly exemption for commuting costs, retained in both regimes for employees with specified disabilities.

Rule 2BB(2), Income-tax Rules

Fully taxable as salary in the year received, including any amount later clawed back.

Section 17(1), Income-tax Act

Fully taxable as salary when it is declared and paid, not when it is earned.

Section 17(1), Income-tax Act

Performance-linked cash is fully taxable salary in the year it is paid.

Section 17(1), Income-tax Act

Shift, night and overtime allowances are fully taxable — no exemption exists for them.

Section 17(1), Income-tax Act

Referral and retention payments are taxable salary when received, including amounts subject to clawback.

Section 17(1), Income-tax Act

A car provided by the employer is valued at prescribed monthly rates, not at its actual cost.

Rule 3(2), Income-tax Rules

A driver engaged for you is a perquisite, valued alongside any car benefit.

Rule 3(2) and Rule 3(3), Income-tax Rules

Running costs are already inside the prescribed car values and are not added separately.

Rule 3(2), Income-tax Rules

A car leased by your employer for your use is valued at the same prescribed rates as an owned car, not at the lease rental.

Rule 3(2), Income-tax Rules

Charging costs sit inside the prescribed car values where the employer bears running expenses.

Rule 3(2), Income-tax Rules