Income Tax--Salary

Limit of Income of Specified Employee Under Section 17(2)(iii)(c) and Limit of Gross Total Income for Purpose of Clause (vi) of Proviso to Section 17(2) Specified Recently

CA. Nisha Bhandari

The Finance Act, 2025 has amended section 17(2)(iii)(c) and clause (vi) of proviso to section 17(2) w.e.f. assessment year 2026-27 so as to provide that the limit of salary for being regarded as specified employee and limit of gross total income for purpose of clause (vi) of proviso to section 17(2) shall be provided by the rules. Recently the CBDT has prescribed these limits and the present write-up aims at discussing this recent statutory development.

1. Certain benefits and amenities taxable only in case of specified employees

Under the scheme of law some of the benefits and amenities if granted or provided free of cost or at concessional rate are taxable in the hands of specified employees only by virtue of clause (iii) of section 17(2). In view of rule 3, the following will be treated as taxable perquisites in the case of specified employees :

(i) Motor car,

(ii) Supply of gas, electricity or water for the employees' household consumption, free of cost;

(iii) Provision for domestic servants;

(iv) Free or concessional educational facilities.

(v) Transport facility provided to employee by transport undertakings (other than railways or airline).

2. Meaning of 'specified employees' [Upto assessment year 2025-26]