CBDT notifies higher quantum of salary/gross total income for specified perquisite taxation/exemption

Prior to the amendment by Finance Act (FA) 2025, as per Section. (S.) 17(2)(iii)(c), the value of specified benefit or amenity provided by an employer, free of cost or at concessional rate, was taxable in the hands of specified classes of employees viz. 

• Director of the company;
• Employee having substantial interest in the company (i.e., beneficial owner of equity shares carrying 20% or more voting power); and
• Employee whose income under the head “salary” (from all employers) excluding non-monetary benefits/ amenities exceeds INR50,000.

Accordingly, specified non-monetary perquisites like motor cars, personal servants, gas, electricity, water, educational facility and transport by transporters provided to above referred categories of employees was taxable as perquisites. For the third category of employees, if the monetary salary did not exceed INR50,000, such perquisites were not taxable.

Clause (vi) of proviso to S.17(2) provided that expenditure incurred by employer on foreign medical treatment of employee or family member (including travel and stay abroad for such purpose along with accompanying one attendant) shall not be considered as taxable perquisite subject to compliance of following conditions:

• medical treatment and stay abroad is incurred to the extent permitted by the Reserve Bank of India (RBI); and
• travel expenditure was excluded if employee’s gross total income as computed before including value of such expenditure did not exceed INR0.2m

FA 2025 substituted the above referred monetary thresholds of INR50,000/INR 0.2m with an amount to be prescribed by rules considering the standard of living and economic conditions. 

Accordingly, the Central Board of Direct Taxes (CBDT) vide its Notification No. 133/2025 ^[1]  has prescribed new Rule 3C and Rule 3D which provide for revised monetary limits for taxation of specified perquisites and exemption of foreign medical treatment. Rule 3C provides for higher monetary limit of INR 0.4m as against the earlier limit of INR50,000 for taxation of specified perquisites. Similarly, Rule 3D provides for a higher monetary limit of INR 0.8m as against the erstwhile limit of INR0.2m for exemption of foreign medical treatment. These higher limits apply with effect from tax year 2025-26 onwards. s.  

^[1] Notification No. 133/2025/F. No. 370142/27/2025 – TPL dated 18 August 2025