Perquisites, or perks, are non-cash benefits an employer provides in addition to salary: a company car, rent-free or concessional accommodation, interest-free loans, stock options, club memberships, and similar. Under the Income Tax Act they are part of your taxable salary. The employer values each one by a prescribed method, adds it to your income, and deducts TDS on the total.

Common perquisites and how they are valued

• Rent-free accommodation: valued as a percentage of salary that varies by city population, less any rent you pay.
• Company car: a fixed monthly value depending on engine capacity and whether a driver is provided, if it is also used privately.
• Interest-free or concessional loan: the difference between the SBI benchmark rate and the rate charged, on the outstanding balance. Small loans and medical loans are exempt: the small-loan limit was Rs 20,000 up to FY 2025-26 and is Rs 2,00,000 under the Income-tax Rules, 2026 from tax year 2026-27.
• ESOPs: taxed as a perquisite on exercise, on the difference between fair market value and the exercise price.
• Free or subsidised meals, gift vouchers, club fees: taxable above small exempt thresholds. The employer-meal limit moved from Rs 50 to Rs 200 a meal from tax year 2026-27, and other limits changed too, as set out under perquisite valuation.

Where an employer pays tax on a non-monetary perquisite on the employee’s behalf, that tax is itself a non-taxable perquisite in the employee’s hands. Perquisite detail is reported in Form 12BA, which is issued with Form 16. From tax year 2026-27 that certificate becomes Form 130 under the Income-tax Act, 2025, and the perquisite statement is renumbered with it.

Frequently asked questions

Are all perks taxable?

Most are, but some are specifically exempt: employer contributions to PF within limits, group health insurance premiums, laptops and phones for work use, and telephone reimbursement.

Do perquisites count in CTC?

Yes. Perks are part of what the employer spends on you, so they appear in CTC even though they are not cash.

Are perquisites taxed under the new regime?

Yes. The perquisite rules apply in both regimes; the regime only changes slab rates and deductions.

See how perks lift taxable salary in the Income Tax Calculator, and how the cash and non-cash pieces of a package fit together in the Salary Breakup Calculator.