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For tax year 2026-27, an employer buys electricity from an outside supplier for an employee’s home, and the benefit is a taxable perquisite. How is it valued under the Income-tax Rules, 2026?

Question and options

For tax year 2026-27, an employer buys electricity from an outside supplier for an employee’s home, and the benefit is a taxable perquisite. How is it valued under the Income-tax Rules, 2026?

  1. The employer’s manufacturing cost per unit, less any amount recovered from the employee

  2. 10% of the employee’s salary, less any amount recovered from the employee

  3. The amount the employer pays the supplier, with no reduction for any amount recovered

  4. The amount the employer pays the supplier, less any amount recovered from the employee

Answer and explanation

Correct answer: D - The amount the employer pays the supplier, less any amount recovered from the employee

Under the utilities table in rule 15 of the Income-tax Rules, 2026, gas, electricity or water bought from an outside agency is valued at the amount the employer pays that agency, reduced by any amount recovered from the employee. The manufacturing cost per unit applies only where the employer produces the supply from its own resources. A percentage of salary is the measure for accommodation, not utilities.

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