IT Act 1961 → 2025 / Salaried employees / Perquisites
Perquisites what is taxed and what is not
Benefits from the employer are taxed as perquisites under section 17. The values come from the Income-tax Rules, 2026.
Tax year 2026-27 · Income-tax Act, 2025 as amended by Finance Act 2026 · reviewed 5 November 2026
Perquisites named in the Act (section 17)
- Rent-free or concessional accommodation.
- Specified securities or sweat equity (ESOPs) — taxed on the fair market value on the date of exercise, less the amount paid (17(1)(d), 17(4)(h)).
- Obligations of the employee paid by the employer (17(1)(f)).
- Employer contribution to recognised PF, NPS (124(1)) and approved superannuation fund above ₹7,50,000 in a year, and the income on that excess (17(1)(h), (i)).
- Other benefits as prescribed in the Rules.
Values under the Income-tax Rules, 2026 (both regimes)
| Benefit | Treatment from 2026-27 | Earlier | New provision | Old provision |
|---|---|---|---|---|
| Meal vouchers / food | Tax-free up to ₹200 per meal | ₹50 per meal | 17 + Rules 2026 | 17(2), Rule 3(7)(iii) |
| Gifts and vouchers from employer | Tax-free up to ₹15,000 a year | ₹5,000 | 17 + Rules 2026 | 17(2), Rule 3(7)(iv) |
| Company car, partly personal use, employer pays running cost | ₹5,000 a month (up to 1.6 litres), ₹7,000 (above) | ₹1,800 / ₹2,400 | 17 + Rule 15 | 17(2), Rule 3(2) |
| Driver provided | ₹3,000 a month extra | ₹900 | 17 + Rule 15 | 17(2), Rule 3(2) |
| Employer-owned car, employee pays running cost for private use | ₹2,000 a month (up to 1.6 litres), ₹3,000 (above) | ₹600 / ₹900 | 17 + Rule 15 | 17(2), Rule 3(2) |
| Employee's own car, running cost reimbursed (official + personal use) | Reimbursement above ₹5,000 / ₹7,000 a month (plus ₹3,000 driver) is taxable | ₹1,800 / ₹2,400 (+₹900) | 17 + Rule 15 | 17(2), Rule 3(2) |
| Interest-free loan for medical treatment of specified diseases | Not taxed up to ₹2,00,000 | ₹20,000 | 17 + Rules 2026 | 17(2), Rule 3(7)(i) |
| Free education in the employer's own school | Not taxed up to ₹3,000 a month per child | ₹1,000 | 17 + Rules 2026 | 17(2), Rule 3(5) |
Limits from the Income-tax Rules, 2026 — final Rules notified by Notification 22/2026, G.S.R. 198(E), in force from 1 April 2026 (tax year 2026-27). For FY 2025-26 and earlier, the Income-tax Rules, 1962 limits apply (₹100 / ₹300 children allowances, ₹50 per meal, ₹5,000 gifts, ₹1,800 / ₹2,400 car, 50% HRA only in Mumbai, Delhi, Kolkata, Chennai).
Meal voucher arithmetic
Illustration: if two meals are provided every working day, ₹200 × 2 meals × 22 working days × 12 months = ₹1,05,600 a year tax-free, under both regimes.
Frequently asked
Are meal vouchers tax-free in the new regime?
Yes. Meal vouchers up to ₹200 per meal are tax-free under both regimes from 2026-27 (Income-tax Rules, 2026).
When is employer PF and NPS contribution taxable?
When the employer's contribution to PF, NPS and superannuation together exceeds ₹7.5 lakh in a tax year (section 17).