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For tax year 2026–27, an employer pays the salary of a gardener employed at the residence of an employee who is a director of the employer company. How is the taxable perquisite valued under the…

Question and options

For tax year 2026–27, an employer pays the salary of a gardener employed at the residence of an employee who is a director of the employer company. How is the taxable perquisite valued under the Income-tax Rules, 2026?

  1. A fixed amount per month prescribed in the Rules, whatever the actual cost

  2. The gardener's salary paid by the employer, less any amount paid by the employee

  3. Ten per cent of the employee's salary, less any amount paid by the employee

  4. The gardener's salary paid by the employer, with no reduction for any payment by the employee

Answer and explanation

Correct answer: B - The gardener's salary paid by the employer, less any amount paid by the employee

Under section 17(1)(c) of the Income-tax Act, 2025, a free amenity given to a director is a perquisite, and the Income-tax Rules, 2026 value the services of a sweeper, gardener, watchman or personal attendant at the salary paid or payable by the employer, reduced by any amount the employee pays for them. A percentage of salary is the method for valuing accommodation, not domestic services.

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