A group representing Bank of Maharashtra officers has urged the Centre to amend the Income Tax Act in the Union Budget to provide relief to public sector bank (PSB) officers from perquisite taxation on leased accommodation and concessional staff loans.
The Bank of Maharashtra Officers’ Organisation (BOMOO) has sent a letter to Finance Minister Nirmala Sitharaman, saying compulsory, service-linked facilities such as official residential accommodation and staff loans are being taxed as perquisites under Section 17(2)(viii) of the Income Tax Act, 1961, imposing a significant financial burden on bank officers. Business Standard has seen the letter.
It said that Rule 3 of the Income Tax Rules creates an “inherent disparity” between Central and state government employees and PSB officers. While government employees are taxed on a nominal licence fee — typically between ₹2,000 and ₹5,000 a month — for official accommodation, bank officers are taxed on the full market rent of leased housing arranged by banks.
“This has resulted in an additional annual tax burden of ₹60,000–₹70,000 or even higher on leased accommodation alone, depending on the place of posting,” BOMOO said.
Highlighting that PSB officers are subject to all-India transfers and are mandatorily required to reside at their place of posting, the union said leased accommodation or rent reimbursement is a service necessity, not a discretionary benefit.
The representation also flagged the taxation of concessional staff loans, including housing and vehicle loans, which have traditionally been part of bank officers’ service conditions. According to the union, notional interest benefits are leading to additional annual tax liabilities ranging from ₹25,000 to as high as ₹3 lakh, substantially eroding take-home pay.
BOMOO acknowledged that the Supreme Court has upheld taxation of such perquisites under existing law but said legislative correction through the Budget is now the only remedy.
The union has sought an amendment to Section 17(2)(viii) and relevant provisions of Rule 3 to exclude employer-provided leased accommodation and concessional staff loans from taxable perquisites, or alternatively, to align their valuation with the licence-fee-based mechanism applicable to government employees.
“Public sector bank officers play a critical role in implementation of government schemes, financial inclusion and priority sector lending. The tax burden arising solely from service-imposed facilities should not be borne by individual officers,” said general secretary of BOMOO.
