Union Budget 2025-26 (Full) + Finance Bill, 2025

D. SOCIO ECONOMIC WELFARE MEASURES

I. Increase in the limits on the income of the employees for the purpose of calculating perquisites

The existing provisions of clause (2) of section 17 provide, inter-alia, that ‘perquisite’ includes the value of any benefit or amenity granted or provided free of cost or at concessional rate by any employer (including a company) to an employee whose income under the head "Salaries" as a monetary benefit does not exceed fifty thousand rupees. This upper limit on income was determined by the Finance Act 2001.

2. Further, the proviso to clause (2) of section 17 provides that any expenditure incurred by the employer for travel outside India on the medical treatment of an employee or any member of the employee’s family shall not be included in ‘perquisite’, subject to the condition that the gross total income of such employee does not exceed two lakh rupees. This upper limit on income was determined by the Finance Act, 1993.

3. These limits on the income of the employees for the purpose of calculating perquisites were put in place more than 20 and 30 years ago respectively. Thus, there is a need to adjust these limits accordingly to take into account changes in standard of living and economic conditions.

4. It is proposed that the provisions of section 17 may be amended so that the power to prescribe rules may be obtained to increase the limit on the gross total income of the employees so that,-

(I) the amenities and benefits received by such employees would be exempt from being treated as perquisites.

(II) the expenditure incurred by the employer for travel outside India on the medical treatment of such employee or his family member would not be treated as a perquisite.

5. These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the assessment year 2026-27 and subsequent assessment years.

[Clause 9]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Perquisite income threshold increase: employer-provided amenities and foreign medical travel may be exempt from perquisite treatment. Proposed amendment to section 17 would grant rulemaking power to increase the gross total income ceilings for treating employer-provided amenities and benefits as non-perquisites, and to raise the income limit excluding employer-funded foreign medical travel from perquisite treatment; the changes take effect from 1 April 2026 and apply to the subsequent assessment year.