Global Partner. Integrated Solutions.
17 October 2025

Revised Thresholds for Perquisite Valuation: A Major Relief for Salaried Employees
 
In August 2025, the CBDT issued Notification No. 133/2025, introducing the Income Tax (22nd Amendment) Rules, 2025. The amendment inserted Rule 3C and Rule 3D, substantially enhancing the exemption limits for perquisites (non-monetary benefits) under Section 17 of the Income-tax Act, 1961. The changes take effect from April 1, 2025.

The amendment takes effect on April 1, 2025.
Provision Old limit New limit
Rule 3C - Salary threshold for perquisites INR 50,000 INR 4,00,000
Rule 3D - Gross total income threshold for medical treatment abroad INR 2,00,000 INR 8,00,000
 
 Rule 3C - Salary threshold of "specified employee" u/s 17(2)(iii)(c)
  • Employees whose salary exceeds INR 4 lakh will be considered as "specified employee".
  • Non-monetary perquisites such as company cars, domestic help, utilities, educational facilities, transport facility will remain tax-free for "specified employees" whose salary is less than INR 4 lakh.
  • Benefits such as ESOPs, interest-free/concessional loans, gifts, food & beverages, club membership are not covered under this relief.
  • This relaxation does not apply to company directors or employees who hold a substantial interest (i.e., over 20% of the voting rights).
 Rule 3D - Gross income threshold for section 17(2)(vi)
  • If the gross total income of an employee does not exceed INR 8 lakh, then expenses of medical treatment abroad, travel and stay for self, family or attendant will be exempt.
  • This rule pertains to exemption for expenses incurred on overseas medical treatment
Our Comments
  • Brings much-needed relief to middle-income salaried employees
  • Makes the tax system more equitable and aligned with modern salary structures.
  • Ensures checks remain in place for directors and senior management.
  • Makes the tax system more equitable and aligned with modern salary structures.
  • A welcome step towards a fairer and more rational tax framework for India's workforce.

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