What’s Changed in Perquisite Taxation?
The Central Board of Direct Taxes (CBDT) has made a significant update to the Income Tax Rules 1962 to clear up confusion about how certain employee perks, or “perquisites,” are taxed. These changes, introduced through the Income Tax (Twenty Second Amendment) Rules, 2025, set new monetary thresholds for calculating taxable income from these benefits.
The New Rules Explained
Previously, perquisites were taxable for employees with a salary over ₹50,000. The new rules, effective August 18, 2025, raise this threshold significantly:
- Rule 3C: Salary Income ThresholdThis new rule states that for general perquisites (like company-provided cars or rent-free housing), the new salary benchmark is ₹4 lakh. This means that perquisites provided to employees with a salary below this amount will not be taxable under this specific provision.
- Rule 3D: Gross Total Income ThresholdThis rule sets a separate threshold of ₹8 lakh for an employee’s gross total income when calculating the tax on specific benefits, such as employee stock options or sweat equity shares. This change brings clarity to the valuation and taxation of these benefits.
In simple terms, the CBDT has raised the bar for who is subject to tax on these non-cash benefits, simplifying the process and potentially reducing the tax burden for many salaried individuals.