Perquisite valuation

Scope (sub-rule 1). For computing income under the head "Salaries", the value of perquisites provided by the employer, directly or indirectly, to the employee or any member of the employee's household by reason of employment is determined under this rule. This page is a map of the rule; the figures sit in the tables and are best read in the bare text.

Where each benefit is valued

Sub-rule	What it values
(2) and Table I	Residential accommodation under section 17(1)(a) and (b): government-provided; employer-owned; leased or rented by the employer; hotel accommodation; furnished accommodation. Clauses (b) to (g) add the exceptions: temporary accommodation at mining, oil-exploration, project, dam, power-generation or off-shore sites; two accommodations after a transfer; continuing accommodation across tax years (tied to the Cost Inflation Index); furniture; and deputation.
(3) and Table II	Use of a motor car, by engine capacity or electric vehicle, and by whether the car is owned by the employer or the employee and whether use is official, private or mixed. Includes the documentation conditions for claiming official use and the normal wear-and-tear measure.
(4) and Table III	Free or concessional goods, services and utilities: a sweeper, gardener, watchman or personal attendant; gas, electricity and water; educational facilities; and travel by employers in the carriage business.
(5) and Table IV	Other benefits and amenities under section 17(1)(e): interest-free or concessional loans (with a medical-treatment exemption by reference to rule 18), holidays, free food and non-alcoholic beverages, gifts and vouchers, credit-card expenses, club expenses, use of movable assets, transfer of movable assets, and any other benefit. Sub-rule (5)(b) sets the record-keeping and employer-certificate conditions for the credit-card and club items.
(6)	Fair market value, on the date the option is exercised, of a specified security or sweat equity share that is an equity share, for section 17(1)(d): average of opening and closing price on the recognised stock exchange if listed (and on the exchange with the highest trading volume if listed on several); the closing price on the nearest preceding trading date if there was no trading; and the value determined by a merchant banker on the specified date if unlisted.
(7)	Fair market value of a specified security that is not an equity share: the value determined by a merchant banker on the specified date.
(8)	Definitions: accommodation, closing price, entertainment, hotel, maximum outstanding monthly balance, member of household, merchant banker, opening price, recognised stock exchange, remote area, salary, and specified date.

Two definitions that decide many cases

• "Member of household" includes the spouse, children and their spouses, parents, and servants and dependants.
• "Salary" for this rule includes pay, allowances, bonus or commission payable monthly or otherwise, or any monetary payment by whatever name from one or more employers. It excludes dearness allowance or pay (unless it enters into superannuation or retirement benefits), the employer's provident fund contribution, exempt allowances, the value of perquisites under section 17(1), anything specifically excluded under section 17(2), and lump sums on termination or retirement such as gratuity, severance pay, leave encashment, voluntary retrenchment benefits and commutation of pension.
• "Specified date" is the date of exercise of the option, or an earlier date not more than 180 days before it.

How to use it. Identify the benefit, find its table row, then read the conditions in the adjoining column before applying the rate: several rows carry conditions that remove or limit the charge.