20 Mar, 2026
Income Tax Rules - 2026: Key Highlights & What Businesses Need to Know
Rule 15 of the Income-tax Rules, 2026 provides a comprehensive framework for the valuation of employee perquisites for taxation under the head “Salaries.” It standardizes how various benefits provided by employers—whether in cash or kind—are to be valued and taxed. The rule covers key areas such as residential accommodation, where valuation depends on factors like ownership and city population, and includes additional value for furnished assets. It also addresses motor vehicle usage, distinguishing between official and personal use, with tax exemptions available only when proper documentation is maintained. Household benefits such as domestic help and utilities are taxed based on actual or attributable cost to the employer.
Education benefits become taxable beyond specified thresholds, while food benefits are exempt up to prescribed limits. The rule further clarifies taxation of gifts, making them taxable only beyond an annual threshold, and introduces provisions for taxing interest-free or concessional loans based on benchmark lending rates. Additionally, reimbursements like credit card and club expenses are taxable unless strictly for business purposes and supported by documentation. The use or transfer of employer-owned assets is also taxed based on prescribed valuation methods, including depreciation.
Overall, Rule 15 emphasizes accurate valuation, transparency, and robust documentation, ensuring a consistent and compliant approach to perquisite taxation for employers and employees.
