Section 17: perquisite

What counts as a perquisite

Section 17(1) includes within "perquisite":

• The value of rent-free accommodation provided by the employer, computed in a prescribed manner
• The value of accommodation provided at a concessional rate, in excess of the rent recoverable from/payable by the employee, computed in a prescribed manner
• The value of any benefit or amenity given free or at a concessional rate by a company to a director or a person with a substantial interest in it, or by any employer to an employee whose salary (by way of monetary payment) exceeds a prescribed amount
• The value of specified security or sweat equity shares allotted/transferred by the current or former employer, free or at a concessional rate
• The value of any other benefit/amenity as may be prescribed
• Any sum paid by the employer for an obligation that would otherwise have been payable by the employee
• Any sum paid by the employer for an assurance on the employee's life or an annuity contract, other than through a recognised provident fund, approved superannuation fund, or specified Deposit-linked Insurance Fund
• The aggregate employer contribution exceeding ₹7,50,000 in a tax year to a recognised provident fund, the section 124(1) pension scheme, and an approved superannuation fund, taken together
• The annual accretion (interest, dividend or similar) during the tax year on the balance attributable to the contribution mentioned above, computed in a prescribed manner

What is excluded from perquisite

Section 17(2) excludes several employer-provided medical benefits and specified insurance-premium payments from being treated as perquisites, including:

• Medical treatment provided to the employee or family in a hospital maintained by the employer
• Employer reimbursement of medical treatment costs incurred at a Government-maintained hospital, a hospital maintained by a local authority, or another hospital approved by the Government for treating its employees
• Employer reimbursement for treatment of prescribed diseases/ailments at a hospital approved by the Principal Chief Commissioner or Chief Commissioner as per applicable guidelines
• Employer-paid premium for approved employee health insurance schemes (under section 30(c)) approved by the Central Government or the Insurance Regulatory and Development Authority
• Employer reimbursement of employee-paid premium for approved health insurance schemes under section 126, approved by the Central Government or IRDA
• Employer expenditure on transport for the employee's commute between residence and office
• Specified employer expenditure/reimbursement for medical treatment, travel and stay abroad for the employee or family member for such treatment, and for one accompanying attendant - subject to RBI permission limits and, for travel costs, a gross total income ceiling to be prescribed

Key defined terms in this section

"Fair market value" and "family" (for this section) are as prescribed/as defined in Schedule III; "gross total income" takes the meaning in section 122(10); "hospital" includes a dispensary, clinic or nursing home; "specified security" and "sweat equity shares" are defined by cross-reference to the Securities Contracts (Regulation) Act, 1956, consistent with their use elsewhere in the Act.

Frequently asked questions