Income-tax Act, 1961Section 17
- 17(1): salary; 17(2): perquisites (rent-free accommodation, ESOPs, specified employee benefits); 17(3): profits in lieu
- Valuation under Rule 3
Applies to FY 2025-26 (AY 2026-27) and earlier years.
IT Act 1961 → 2025 / Section 17
SalarySection 17 → Section 17
Meaning of salary, perquisites and profits in lieu of salary
Section 17 of the old Income-tax Act, 1961 · new section 17 under the Income-tax Act, 2025
New reference Section 16 (salary), 17 (perquisites), 18 (profits in lieu of salary)
Income-tax Act, 2025Section 16 (salary), 17 (perquisites), 18 (profits in lieu of salary)
- Salary: section 16; perquisites: section 17; profits in lieu: section 18
- ESOP/sweat equity perquisites: 17(1)(d)
- Specified-employee threshold and valuation prescribed in the Rules
Applies from tax year 2026-27 (from 1 April 2026).
What changed
Split into three sections; content carried over.
Practice notes
- ESOP tax deferral for start-up employees: section 289(3).
Frequently asked
Where are perquisites in the new Income Tax Act 2025?
Section 17; salary is defined in section 16 and profits in lieu of salary in section 18.
What is section 17 called in the new Income-tax Act, 2025?
Section 17 of the Income-tax Act, 1961 corresponds to Section 16 (salary), 17 (perquisites), 18 (profits in lieu of salary) of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).
What changed in section 17 under the new Income Tax Act?
Split into three sections; content carried over.
Is section 17 still applicable for FY 2025-26?
Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 17 of the 1961 Act. Section 16 (salary), 17 (perquisites), 18 (profits in lieu of salary) of the 2025 Act applies from tax year 2026-27.