Calculate the taxable value of rent-free accommodation, company car, concessional loans, and free meals under Section 17(2) & Rule 3 — free, FY 2025-26 rates, instant results.
Your employer gave you a company flat, a car, or an interest-free loan. All three are income — just not cash income. Under Section 17(2) of the Income Tax Act, 1961, and the valuation rules in Rule 3 of the Income Tax Rules, 1962, these benefits get a rupee value and land in your gross salary for TDS purposes. This perquisites valuation calculator covers the four most common employer benefits: rent-free accommodation, motor car, concessional loans, and free meals — all computed under FY 2025-26 rates.
Salaried employees, payroll teams, and CAs use it while preparing Form 12BA and computing TDS under Section 192. It's relevant to private-sector employees who get company-leased housing, to those driving a firm-owned car for personal use, and to anyone whose employer extends a housing or personal loan at below-market rates. Enter your inputs, and the tool returns the taxable perquisite value in rupees, with the formula it applied shown line by line.
It applies the formulas from Rule 3 of the Income Tax Rules, 1962, as amended by CBDT Notification No. 65/2023 (effective 1 September 2023).
Employer-owned property — Non-government employee:
Perquisite Value = Rate × Monthly Salary × Months
Where Rate depends on city population per 2011 Census (CBDT Notification 65/2023):
| City Population | Rate |
|---|---|
| Above 40 lakh (Mumbai, Delhi, Bengaluru, Hyderabad, Chennai, Kolkata) | 10% |
| 15 lakh to 40 lakh (Pune, Ahmedabad, Surat, Jaipur) | 7.5% |
| Up to 15 lakh (all other cities and towns) | 5% |
If furnished, add 10% per annum of the original cost of furniture (or actual hire charges, whichever is higher).
Employer-leased property:
Perquisite Value = Lower of (Actual rent paid by employer OR 10% of salary)
The 2023 amendment cut this cap from 15% to 10% of salary — the same rate used for a metro-city owned flat. Older articles and payroll sheets still quoting 15% are working off the pre-amendment rule.
Government employees: Perquisite = Licence fee fixed by government − rent paid by employee.
In every case, deduct rent actually paid by the employee.
Continuing occupation, year two onward: If the same non-government employer keeps providing the same accommodation (owned or leased) beyond one year, the perquisite value in later years is capped at the first year's value adjusted by the Cost Inflation Index — whichever is lower, the fresh calculation or the CII-adjusted first-year figure. This cap does not apply to government accommodation; only to employer-owned or employer-leased housing for non-government employees.
Monthly Perquisite = ₹1,800 (engine ≤ 1,600 cc) or ₹2,400 (engine > 1,600 cc)
+ ₹900 if driver is also provided
Less: Recovery from employee (if any)
Annual Perquisite = Monthly value × Months
These are deemed values — actual running costs don't enter the calculation. They've stood unrevised since 2009 and still apply for FY 2025-26.
For each month: Interest = (SBI rate on 1 April − Employer rate) × Closing balance for that month ÷ 12
Annual Perquisite = Sum of the 12 monthly interest figures
This is the maximum outstanding monthly balance method — the closing loan balance at the end of each month gets its own interest calculation, then all 12 are added up. For a flat loan that never changes, this collapses to one balance times 12 months. For any EMI or reducing-balance loan, each month's balance is different, so each month has to be computed separately — you can't just take the current outstanding balance and multiply by 12.
Exempt if total loan balance is ₹20,000 or less. The SBI rate used is the rate for the same loan type (home, personal, car) as notified on 1st April of the financial year.
Taxable per meal = Meal value − ₹50 (exempt limit, FY 2025-26)
Annual Perquisite = Taxable per meal × Total meals in the year
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Farida works at a private fintech firm in Pune. Her employer-owned flat is furnished, and she pays ₹5,000/month to the company.
Her monthly salary (basic + DA) is ₹1,20,000. The flat came with furniture that originally cost ₹2,00,000. She stayed there all 12 months of FY 2025-26.
Step 1 — City tier: Pune's population is between 15 lakh and 40 lakh, so the rate is 7.5%.
Step 2 — Accommodation perquisite:
7.5% × ₹1,20,000 × 12 = ₹1,08,000
Step 3 — Furniture perquisite:
10% of ₹2,00,000 × (12/12) = ₹20,000
Step 4 — Gross perquisite: ₹1,08,000 + ₹20,000 = ₹1,28,000
Step 5 — Less rent paid:
₹5,000 × 12 = ₹60,000
Net taxable perquisite: ₹68,000
This ₹68,000 gets added to Farida's gross salary. Her employer deducts TDS on the enhanced total and reports the perquisite in Form 12BA. It's her first year in this flat, so the CII cap doesn't apply yet — it only kicks in if the company keeps providing the same flat into a second year.
If you're doing a CTC comparison and one offer includes a company flat, you can't compare the two packages without computing the tax cost of the accommodation. That's exactly what this tool handles.
Finance Act 2025 raised the "specified employee" threshold from ₹50,000 to ₹4,00,000: Effective FY 2025-26 (AY 2026-27), under Section 17(2)(iii) read with the newly inserted Rule 3C, an employee is only a "specified employee" — and therefore taxable on certain benefit-in-kind perquisites — once their monetary salary crosses ₹4,00,000 a year, up from the old ₹50,000 bar. This isn't a rupee cap on how much perk value is tax-free; it's a threshold that decides who falls into the specified-employee category at all. Most salaried employees now clear ₹4 lakh easily, so in practice the exemption mainly helps lower-salary staff on small benefits like club memberships or free use of employer assets. [VERIFY: confirm exact list of perquisites this reclassification affects, against Notification No. 133/2025 dated 18-08-2025.]
CBDT Notification 65/2023 — new city population thresholds: Cities are now classified using 2011 Census data, replacing the earlier 2001 Census thresholds. Several cities moved between tiers. Bengaluru, Hyderabad, and Chennai shifted into the 10% category; Pune moved into the 7.5% bracket. This change was effective from 1 September 2023 and applies to all of FY 2024-25 and FY 2025-26. Source: PIB Press Release, CBDT Notification 65/2023.
⚠️ FY 2026-27 — major Rule 15 changes incoming: The Income-tax Rules, 2026, framed under the new Income-tax Act, 2025 (both effective from 1 April 2026, Tax Year 2026-27), introduce Rule 15 with substantially revised figures. Car perquisite jumps to ₹5,000/month (≤1,600cc) and ₹7,200/month (>1,600cc), the driver allowance rises to ₹2,700/month, and the free meal exemption increases to ₹200/meal. These figures don't apply to FY 2025-26. This calculator uses FY 2025-26 values only.
Using gross CTC as "salary" for the accommodation formula. Rule 3 defines salary specifically as basic + DA + commission based on percentage of turnover. Bonus, HRA, allowances, and employer PF contributions are excluded. Using CTC inflates the perquisite.
Applying the 2001 Census city list instead of 2011. CBDT updated population thresholds in 2023. Cities like Pune and Surat now fall in the 7.5% bracket, not 5%. Check the updated list before you lock in the rate.
Using 15% for employer-leased accommodation. That was the pre-2023 cap. The current cap is 10% of salary — same as an owned flat in a metro city.
Netting actual car expenses against the deemed value. The ₹1,800 and ₹2,400 monthly figures are fixed deemed amounts — you can't reduce them by showing actual petrol or maintenance bills. The only permissible deduction is a recovery charged to the employee.
Forgetting the ₹20,000 threshold on concessional loans. If the total outstanding loan balance is ₹20,000 or less, the perquisite is nil. Many employees with small festival advances miss this exemption and tax themselves unnecessarily.
Applying one flat balance to a whole year's loan interest. Rule 3(7)(i) wants the maximum outstanding balance for each month, not one number multiplied by 12. On a reducing-balance loan, this materially changes the answer.
Using the SBI rate from the wrong date. Rule 3(7)(i) mandates the SBI lending rate as on 1st April of the financial year for the same loan type. Using a current or mid-year rate gives the wrong perquisite.
Skipping Form 12BA on Form 16. Perquisites are reported in Part B of Form 16 through Form 12BA. If the employer omits it, the employee still has to declare perquisites in their ITR. Leaving them out isn't a saving — it's a mismatch the AIS will flag.
Not always. The Income Tax Act uses deemed values for most perquisites — particularly car and accommodation. The deemed value (e.g., 7.5% of salary for a city flat) can differ significantly from the property's actual market rent. You pay tax on the deemed figure, not what you'd actually pay a landlord.
Under Rule 3, salary means basic pay, dearness allowance, and commission linked to turnover percentage. It excludes all other allowances, bonuses, employer's PF contribution, perquisite values, and any non-recurring payment. Payroll teams frequently get this wrong. Check your salary certificate carefully before computing the base.
Yes. For an employer-owned flat, the perquisite is a fixed percentage of your salary by city tier. For a leased flat, you take the lower of the actual rent paid by the employer or 10% of your salary. Leased accommodation can sometimes result in a higher perquisite than owned property — especially if your employer pays above-market rent in a metro.
No. Rule 3(2) taxes only personal or mixed use. If you can demonstrate — with a logbook or mileage records — that the car is used purely for official duties, no perquisite applies. Mixed use is the default assumption if you keep the car overnight or on weekends. Purely official use needs proper documentation.
Yes, in part. Rent paid to the employer and monthly recovery charged for car use both reduce the taxable perquisite. Raising these to match the deemed perquisite would bring the net perquisite to zero. Some employees negotiate this as part of CTC structuring.
Yes — for non-government employer accommodation, a Cost Inflation Index cap applies once the same flat is occupied for more than one year: the value can't exceed the first year's figure adjusted by CII. Government accommodation isn't affected by this cap. For all cases, the underlying salary figure still moves year to year as your pay changes, so the fresh calculation and the CII-capped figure need to be compared each year — you use whichever is lower.
The employer values all perquisites at the start of (or during) the financial year, includes the total in estimated income, and deducts monthly TDS under Section 192. At year-end, the aggregate perquisite value is reported in Form 12BA. Part B of Form 16 carries this to the employee. You then report it as "salary" in your ITR — it's already baked into the gross salary figure.
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