Moment guide · FY 2026-27
My salary includes a company car, housing or other perks
How are company car, rent-free accommodation and meal vouchers taxed, and can I restructure them?
Company perquisites (car, housing, ESOP) are taxable as salary u/s 17(2) at prescribed valuations — not at actual cost to employer. Restructuring to tax-efficient components (telephone reimbursement, LTA, meal vouchers) saves tax only in the old regime; in the new regime, perquisites are still taxable but restructuring exemptions are largely gone.
Your legitimate options
Every route the statute actually gives you — with its condition, cap and deadline.
| Route | Condition | Cap / deadline |
|---|---|---|
| Car (employer-owned, used for work + personal) | Engine capacity ≤1600cc | ₹1,800/mo perquisite (₹2,400/mo for >1600cc); +₹900/mo if driver provided. Old and new regime both taxed. |
| Rent-free accommodation (employer-owned) | City population >25L: 15% of salary; 15–25L: 10%; <15L: 7.5% | Perquisite = % of salary; taxable as salary |
| Meal vouchers / meal card | Provided during working hours | ₹50/meal up to 2 meals per working day is exempt (legacy rule); excess taxable |
| LTA (Leave Travel Allowance) | Actual travel fare (air/rail/bus) for domestic travel | 2 journeys exempt in a 4-year block; economy air or AC-1 rail fare limit |
| Telephone / internet reimbursement | Actual bills paid for official use | Exempt on reimbursement of actual bills — no fixed limit; personal portion taxable |
The #1 trap
Under the new regime, most salary restructuring for tax efficiency is pointless — HRA, LTA, meal exemptions, and standard deductions are all removed except the ₹75k standard deduction for salaried employees.
The decision path
Follow it top to bottom — the first condition that matches is your answer.
Worked example
Rohan, product manager, ₹25L CTC with company car and accommodation
Rohan's CTC is ₹25L. His employer provides: car (1200cc, employer-owned, personal use allowed), rent-free 2BHK in Mumbai (employer-owned), ₹5,000/month meal card. Perquisite valuation (old regime): Car: ₹1,800/month × 12 = ₹21,600/year (employer-provided fuel and maintenance) Rent-free accommodation: 15% of salary (Mumbai, >25L population). His 'salary' for this purpose = basic + DA + other cash = ₹18L. Perquisite = 15% × ₹18L = ₹2.7L/year. Meal card: ₹50 × 2 meals × 250 working days = ₹25,000 exempt. His card provides ₹60,000/yr — taxable excess = ₹35,000. Total perquisites added to taxable salary: ₹21,600 + ₹2,70,000 + ₹35,000 = ₹3,26,600. Rohan's actual cash salary = ₹10L. Total taxable = ₹10L + ₹3.26L = ₹13.26L. At old regime 30% slab (after standard deduction ₹50k), tax ≈ ₹2.2L. If Rohan switches to new regime: perquisites still taxable at same valuations, but standard deduction = ₹75k. Tax slightly lower on the same ₹13.26L. Restructuring benefit is minimal in new regime. A quick call with us dials in the final figure.
Questions people actually ask
Sections: 17(2), 17(2)(iii), 17(2)(vi) · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).