Rule 15 — Valuation of perquisites. Made under s.17 of the Income-tax Act, 2025.
Rule 15 gives effect to Section 17 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) sets the scope: for computing income chargeable under the head "Salaries", the value of perquisites provided by the employer, directly or indirectly, to the employee or to any member of his household by reason of his employment is determined in accordance with this rule.
Sub-rule (2) values residential accommodation through Table I. For Government accommodation provided to employees holding office in connection with the affairs of the Union or a State, the value is the licence fee determined under that Government's rules, reduced by the rent actually paid. For any other employer where the accommodation is owned by the employer, it is 10% of salary in cities with population exceeding forty lakhs as per the 2011 census, 7.5% where the population exceeds fifteen lakhs but not forty lakhs, and 5% in other areas, in each case for the period of occupation and reduced by rent actually paid by the employee. Where the employer takes the accommodation on lease or rent, it is the actual lease rental or 10% of salary, whichever is lower, reduced by rent actually paid. Hotel accommodation is valued at the actual charges or 24% of salary for the period, whichever is lower, reduced by rent paid, with an exception where the hotel accommodation on transfer does not exceed fifteen days in aggregate. Clause (b) takes the sub-rule off temporary accommodation at a mining, on-shore oil exploration, project execution, dam, power generation or off-shore site with plinth area not exceeding 1000 square feet located at least eight kilometres from municipal limits, or located in a remote area. Clause (c) deals with transfer: where accommodation is retained at the old place and provided at the new one, only the lower-valued accommodation is charged for a period not exceeding ninety days, and both thereafter. Clause (d) caps the value for a continuing accommodation by reference to the first tax year figure, indexed by the ratio of the Cost Inflation Index for the year of computation to that for the year the accommodation was first provided. Clause (e) adds furniture: 10% per annum of the cost of furniture, or actual hire charges if hired, reduced by what the employee pays. Clause (f) treats a deputationist's host body as the employer and values the accommodation as if owned by it.
Sub-rule (3) values the use of a motor car through Table II, per calendar month. Where the car is owned or hired by the employer and used wholly and exclusively for official duties, there is no value if the documents in sub-rule (3)(c) are maintained; used exclusively for private purposes, the value is the actual running and maintenance expenditure including the chauffeur's remuneration, increased by normal wear and tear and reduced by amounts charged from the employee; used partly for duties and partly privately, it is Rs. 5,000 per month where engine capacity does not exceed 1.6 litres or the car is an electric vehicle and Rs. 7,000 where it exceeds 1.6 litres if the employer meets running expenses, or Rs. 2,000 and Rs. 3,000 respectively if the employee meets them, in every case plus Rs. 3,000 if a chauffeur is also provided. Where the employee owns the car and the employer reimburses running costs, official use alone carries no value on the documents being maintained, and mixed use is the actual expenditure reduced by the Sl. No. 1(c)(i) amounts; for any other automotive conveyance owned by the employee the reduction is Rs. 3,000. Clause (b) handles more than one car: the first at Sl. No. 1(c)(i) and the others at Sl. No. 1(b). Clause (c) allows a higher official-use figure to be claimed where complete journey details are maintained and the employer certifies the expenditure was incurred wholly and exclusively for official duties. Clause (d) fixes normal wear and tear at 10% per annum of the actual cost of the car.
Sub-rule (4) values goods, services and utilities through Table III: sweeper, gardener, watchman or personal attendant at the salary paid for the service; gas, electricity or water at the amount paid to the outside agency, or the manufacturing cost per unit where supplied from the employer's own resources; educational facilities at the employer's expenditure, or at the cost in a similar institution in or near the locality where the institution is owned and maintained by the employer or the facility is in another institution by reason of employment, in each case reduced by amounts paid or recovered and, for the employer-maintained institution, where the value per child exceeds Rs. 3,000 per month; and free or concessional travel provided by an employer engaged in the carriage of passengers or goods, at the value offered to the public.
Sub-rule (5) values other benefits under section 17(1)(e) through Table IV: interest-free or concessional loans at the State Bank of India rate for the same purpose as on the 1st day of the tax year applied to the maximum outstanding monthly balance, with no value for loans for medical treatment of diseases specified in rule 18 or where the aggregate does not exceed Rs. 2,00,000; holiday expenses at the employer's expenditure; free food and non-alcoholic beverages at the expenditure, but not where provided during working hours at the office or through paid vouchers usable only at eating joints up to Rs. 200 per meal, nor for tea or snacks during working hours, nor in a remote area or off-shore installation; gifts, vouchers or tokens at their amount, nil if below Rs. 15,000 in aggregate during the tax year; credit card expenses and club expenditure, each with an official-purpose or business-purpose carve-out on the sub-rule (5)(b) conditions; use of a movable asset at 10% per annum of actual cost or the rent paid, other than laptops, computers, tablets and mobile phones; transfer of a movable asset at actual cost less normal wear and tear at 50% for computers and electronic items and 20% for motor cars, both on the reducing balance method, and 10% for other assets, for each completed year of use; and any other benefit at cost to the employer under an arm's length transaction.
Sub-rules (6) and (7) fix fair market value for section 17(1)(d). For an equity share listed on a recognised stock exchange on the date the option is exercised, it is the average of the opening and closing price on that date, taken on the exchange recording the highest volume where the share is listed on more than one; where there is no trading on that date, the closing price on the nearest preceding date, again on the highest-volume exchange if more than one records it; and for an unlisted share, the value determined by a merchant banker on the specified date. For a specified security that is not an equity share, sub-rule (7) leaves the value to a merchant banker on the specified date. Sub-rule (8) defines accommodation, closing price, entertainment, hotel, maximum outstanding monthly balance, member of household, merchant banker, opening price, recognised stock exchange, remote area, salary and specified date; "specified date" is the date of exercise or any earlier date not more than one hundred and eighty days earlier.
Section 17 makes perquisites chargeable under "Salaries" but does not say what a rent-free flat, a company car or a cheap loan is worth. This rule does the arithmetic, and does it by formula rather than by market enquiry, so that the same benefit is valued the same way for every employee and can be put through payroll deduction. The exclusions — site accommodation, official-use vehicles, small gifts, canteen meals — mark out what the Board treats as not a personal benefit at all.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Employer-owned accommodation, large cities | 10% of salary | Cities having population exceeding forty lakhs as per 2011 census, for the period of occupation, less rent actually paid by the employee | Sub-rule (2)(a), Table I Sl. No. 2(a)(i) |
| Employer-owned accommodation, mid-sized cities | 7.5% of salary | Population exceeding fifteen lakhs but not exceeding forty lakhs as per 2011 census | Sub-rule (2)(a), Table I Sl. No. 2(a)(ii) |
| Employer-owned accommodation, elsewhere | 5% of salary | Other areas | Sub-rule (2)(a), Table I Sl. No. 2(a)(iii) |
| Leased accommodation | Actual lease rental or 10% of salary, whichever is lower | Accommodation taken on lease or rent by the employer; reduced by rent actually paid by the employee | Sub-rule (2)(a), Table I Sl. No. 2(b) |
| Hotel accommodation | Actual charges or 24% of salary, whichever is lower | For the period during which the accommodation is provided; reduced by rent actually paid or payable by the employee | Sub-rule (2)(a), Table I Sl. No. 3 |
| Hotel stay on transfer that is not charged | Not exceeding fifteen days in aggregate | Accommodation provided in a hotel on the employee's transfer from one place to another | Sub-rule (2)(a), Table I Sl. No. 3 |
| Site accommodation outside the sub-rule | Plinth area not exceeding 1000 square feet and not less than eight kilometres from municipal or cantonment board limits | Temporary accommodation at a mining, on-shore oil exploration, project execution, dam, power generation or off-shore site | Sub-rule (2)(b)(i) |
| Dual accommodation on transfer | Ninety days | Only the lower-valued accommodation is charged for this period; both are charged thereafter | Sub-rule (2)(c) |
| Furniture provided with accommodation | 10% per annum of the cost of furniture | Added to the Table I value; reduced by charges paid or payable by the employee; actual hire charges instead where the furniture is hired from a third party | Sub-rule (2)(e) |
| Base year for the indexed cap on continuing accommodation | Tax year 2023-2024, or the tax year in which the accommodation was provided, whichever is later | "first tax year" for the Cost Inflation Index ratio in sub-rule (2)(d) | Sub-rule (2)(g)(ii) |
| Car up to 1.6 litres or electric, partly official and partly private, employer meeting expenses | Rs. 5,000 per calendar month | Plus Rs. 3,000 if a chauffeur is also provided by the employer | Sub-rule (3)(a), Table II Sl. No. 1(c)(i) |
| Car exceeding 1.6 litres, partly official and partly private, employer meeting expenses | Rs. 7,000 per calendar month | Plus Rs. 3,000 if a chauffeur is also provided by the employer | Sub-rule (3)(a), Table II Sl. No. 1(c)(i) |
| Car up to 1.6 litres or electric, private running expenses met by the employee | Rs. 2,000 per calendar month | Plus Rs. 3,000 if a chauffeur is provided by the employer | Sub-rule (3)(a), Table II Sl. No. 1(c)(ii) |
| Car exceeding 1.6 litres, private running expenses met by the employee | Rs. 3,000 per calendar month | Plus Rs. 3,000 if a chauffeur is provided by the employer | Sub-rule (3)(a), Table II Sl. No. 1(c)(ii) |
| Employee-owned conveyance other than a motor car, mixed use | Rs. 3,000 | Deducted from the actual expenditure reimbursed by the employer, if the sub-rule (3)(c) conditions are fulfilled | Sub-rule (3)(a), Table II Sl. No. 3(b) |
| Normal wear and tear of a motor car | 10% per annum of the actual cost | Added when the car is used exclusively for private purposes and the employer meets running expenses | Sub-rule (3)(d) |
| Educational facility in an institution owned and maintained by the employer | Rs. 3,000 per month per child | Valued at the cost in a similar institution in or near the locality where the cost of education or value of the benefit per child exceeds this amount | Sub-rule (4), Table III Sl. No. 3(b) |
| Loans carrying no perquisite value | Not exceeding Rs. 2,00,000 in the aggregate | Also no value where the loan is for medical treatment of diseases specified in rule 18, except so much as has been reimbursed under a medical insurance scheme | Sub-rule (5)(a), Table IV Sl. No. 1(a) |
| Rate for valuing a concessional loan | The annual rate charged by the State Bank of India as on the 1st day of the relevant tax year for loans for the same purpose | Applied to the maximum outstanding monthly balance, less interest actually paid; the rule points to the bank's rate and does not itself fix a percentage | Sub-rule (5)(a), Table IV Sl. No. 1 |
| Free food and non-alcoholic beverages not charged | Rs. 200 per meal | Provided during working hours at office or business premises, or through paid vouchers usable only at eating joints | Sub-rule (5)(a), Table IV Sl. No. 3(a) |
| Gifts, vouchers or tokens | Below Rs. 15,000 in aggregate during the tax year | Value taken as nil below this aggregate; at or above it the sum equal to the amount of the gift is the value | Sub-rule (5)(a), Table IV Sl. No. 4 |
| Use of a movable asset belonging to or hired by the employer | 10% per annum of the actual cost, or the rent or charge paid by the employer | Other than assets already specified in the rule and other than laptops, computers, tablets and mobile phones; less amounts paid or recovered from the employee | Sub-rule (5)(a), Table IV Sl. No. 7 |
| Wear and tear on transfer of a movable asset — computers and electronic items | 50% by reducing balance method | For each completed year during which the asset was put to use by the employer | Sub-rule (5)(a), Table IV Sl. No. 8(a) |
| Wear and tear on transfer of a movable asset — motor cars | 20% by reducing balance method | For each completed year during which the asset was put to use by the employer | Sub-rule (5)(a), Table IV Sl. No. 8(b) |
| Wear and tear on transfer of a movable asset — other assets | 10% | For each completed year during which the asset was put to use by the employer | Sub-rule (5)(a), Table IV Sl. No. 8(c) |
| Specified date for a merchant banker's valuation | The date of exercising of the option, or any earlier date not more than one hundred and eighty days earlier | Used for unlisted shares under sub-rule (6)(d) and for specified securities that are not equity shares under sub-rule (7) | Sub-rule (8)(l) |
| Remote area | Outside the local limits of, and beyond thirty kilometres measured aerially from, a municipality or cantonment board having a population of one lakh or more based on the 2011 census | Definition used in sub-rule (2)(b) and in Table IV Sl. No. 3(c) | Sub-rule (8)(j) |
Salary here is not the salary on the payslip. Sub-rule (8)(k) builds a special meaning — pay, allowances, bonus or commission from one or more employers, but excluding dearness allowance that does not enter retirement benefits, the employer's provident fund contribution, exempt allowances, the value of section 17(1) perquisites, section 17(2) exclusions and terminal lump sums — and every percentage in Table I runs on that figure. The motor car amounts in Table II are per calendar month and are fixed sums, not proportions of expenditure: an employer who spends far more than Rs. 7,000 a month on a large car used partly privately still values the perquisite at Rs. 7,000 plus Rs. 3,000 for a chauffeur. The no-value entries in Table II and the carve-outs in Table IV Sl. Nos. 5 and 6 are conditional on documentation, not on the employer's assertion: sub-rule (3)(c) and sub-rule (5)(b) require complete details and a certificate that the expenditure was wholly and exclusively for official duties, and without them the benefit is valued in full. Sub-rule (2)(d) is a ceiling, not a computation — it takes the value already worked out under Table I Sl. No. 2 and refuses to let it exceed the first-year figure indexed by the Cost Inflation Index ratio, so the ordinary Table I result still has to be computed first.
A company provides an unfurnished flat it owns in a city with population above forty lakhs to an employee for the whole tax year, and recovers Rs. 60,000 as rent. Salary within the meaning of sub-rule (8)(k) is Rs. 20,00,000, so the Table I value is 10% of that, Rs. 2,00,000, less the Rs. 60,000 recovered, leaving Rs. 1,40,000. The company also allows the employee a 1.4 litre car for both office and personal use and pays its running costs and a chauffeur, so sub-rule (3) adds Rs. 5,000 plus Rs. 3,000 a month, Rs. 96,000 for the year, whatever the actual running expenditure was.
You meet it every month in payroll and every year in the Form No. 130 certificate and the salary computation the employer files, where each perquisite is carried at the value this rule gives it. An employee meets it again on assessment if the Assessing Officer disputes the certificate or documentation supporting a no-value entry.
the value of perquisites provided by the employer, either directly or indirectly, to the assessee (herein referred to as the employee) or to any member of his household by reason of his employment, shall be determined in accordance with the provisions of this rule
the normal wear and tear of a motor car shall be taken at 10% per annum of the actual cost of the motor car or cars
the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange