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Which of the following statements about income under the Income-tax Act, 2025 are correct? Income can be taxable even when it is received in kind rather than in money. A benefit in kind is taxable…

Question and options

Which of the following statements about income under the Income-tax Act, 2025 are correct?

  1. Income can be taxable even when it is received in kind rather than in money.
  2. A benefit in kind is taxable only if the employee can convert it into money.
  3. Income can be taxable on accrual even before it is received.

  1. 1 and 3 only

  2. 2 and 3 only

  3. 1, 2 and 3

  4. 1 and 2 only

Answer and explanation

Correct answer: A - 1 and 3 only

Section 17(1) of the Income-tax Act, 2025 taxes perquisites such as rent-free accommodation, which cannot be converted into money, so the convertibility test of English law does not apply; the second statement is wrong. Section 5 includes income that accrues or arises in the tax year as well as income received, so income can be taxed before it is received.

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