The Central Board of Direct Taxes (CBDT) has notified new income threshold limits for calculating tax-free perquisites (perks) under the Income-tax Act. The changes were introduced through the Finance Act, 2025, and formally notified in the India e-Gazette recently.
What has changed?
Until now, the salary income limit for identifying “specified employees” under perquisite taxation was ₹50,000, while the threshold for availing certain tax-free overseas medical treatment was ₹2 lakh.
Under the new rules:
- The limit for specified employees has been raised to ₹4 lakh.
- The limit for overseas medical treatment has been raised to ₹8 lakh.
This change has been brought in by inserting Rule 3C and Rule 3D into the Income-tax Rules, 1962.
CBDT clarified that the ₹4 lakh and ₹8 lakh thresholds refer to the employee’s salary or gross total income, which determines whether the benefits/amenities provided by an employer are taxable as perquisites. Importantly, these figures do not represent the value of the perks themselves.
What are perquisites?
Perquisites (or “perks”) are benefits that employees receive from their employers in addition to salary. These can include:
- Use of a car or other vehicles provided by the employer
- Services of domestic staff such as a sweeper, gardener, watchman, or attendant
- Supply of gas, electricity, or water
- Educational facilities provided to family members
- Transportation facilities
What this means for taxpayers?
For salaried employees, this amendment means that the scope of who qualifies as a “specified employee” has been broadened in line with income levels.
Employees with salary income below ₹4 lakh will not be taxed on certain perquisites, even if such facilities are provided by the employer.
Similarly, the threshold for availing overseas medical treatment without perquisite taxation has been lifted to ₹8 lakh, providing relief to middle-income taxpayers.
By raising these thresholds after more than a decade, the government aims to update tax rules in line with current income levels and reduce the tax burden on lower and middle-salaried employees.
