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Ravi, a private-sector employee, is not a director and has no substantial interest in his employer company, and his salary is below the limit for specified employees. His employer gives him a…

Question and options

Ravi, a private-sector employee, is not a director and has no substantial interest in his employer company, and his salary is below the limit for specified employees. His employer gives him a rent-free flat. How is the benefit treated under the Income-tax Act, 2025?

  1. Taxable as income from house property in his hands

  2. Taxable as a perquisite under section 17(1)(a)

  3. Not taxable, because his salary is below the prescribed limit

  4. Not taxable, because he is not a director or substantial shareholder

Answer and explanation

Correct answer: B - Taxable as a perquisite under section 17(1)(a)

Section 17(1)(a) of the Income-tax Act, 2025 makes the value of rent-free accommodation a perquisite for every employee, valued as prescribed. The restriction to directors, substantial shareholders and employees above a salary limit in section 17(1)(c) applies only to other free benefits and amenities, not to accommodation.

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