Perquisite Valuation Calculator

What a perquisite is, and why "free" is never free

A perquisite — a "perk" — is a benefit in kind your employer gives you on top of cash salary: the use of a company house or car, a subsidised loan, free education for your children, and so on. The tax law treats these as part of your salary income under the salary heads, Sections 15 to 19 of the Income-tax Act 2025, and taxes them at your slab. The catch is that they are non-cash, so the law has to put a rupee value on each one before it can be taxed — and those valuation rules are where the interesting differences lie.

For some perks the assigned value is close to the real benefit, so the tax is much what you would expect. For others the value is set by a formula that sits well below what the benefit is actually worth, which quietly makes those perks highly tax-efficient forms of pay. Knowing which is which lets you negotiate a package that delivers more after tax, and lets you check that your employer has valued each perk correctly on your Form 16 rather than over-taxing you.

This calculator handles the three perquisites that come up most often and carry the most rule-heavy valuations — accommodation, a company car, and a concessional loan. For each it applies the actual rule, shows the value added to your salary, and translates that into the extra tax at your marginal rate, so you can see the real cost rather than a vague sense that the perk is "taxable".

Rent-free or concessional accommodation

A company house is the heaviest perquisite for most people, and the rules were revised to be percentage-based on your salary. Where the employer owns the accommodation, the value is a percentage of your salary — 10% if the city's population is above 40 lakh, 7.5% if it is between 15 and 40 lakh, and 5% if it is below 15 lakh — less any rent you pay the employer. "Salary" for this purpose means your basic, dearness allowance that counts for retirement benefits, bonus, commission and taxable allowances, but not other perquisites.

Where the employer leases the accommodation rather than owning it, the value is the lower of the actual lease rent the employer pays or 10% of your salary, again less any rent you contribute. That "lower of" is important: for an expensive leased flat, the value is capped at 10% of your salary even if the real rent is far higher, which can make a leased company flat surprisingly reasonable in tax terms. The calculator applies whichever rule matches your situation and subtracts your contribution.

Because the value is a fixed percentage of salary rather than the market rent of the property, a company house in a costly location is often taxed on a value well below what renting the same place would cost you out of taxed income — a genuine advantage. But on a high salary the percentage still produces a large number, so it is worth seeing the figure before you accept accommodation in lieu of cash. Any rent you pay the employer reduces the value rupee for rupee, and if your contribution matches or exceeds the computed value, the perquisite disappears entirely, which the calculator will tell you.

The company car: the most tax-efficient perk there is

A company car is the clearest example of a perquisite valued far below its real worth. The rules do not tax you on the car's price or on the actual running cost — they assign a small fixed monthly figure for private use, and that is all that is added to your salary. Where the employer bears the running and fuel costs, the figure is ₹2,400 a month for a car above 1600 cc and ₹1,800 a month for a smaller one; where you bear the running costs yourself, it drops to ₹900 or ₹600 a month. A chauffeur adds a flat ₹900 a month.

Put that against reality. A car worth many lakhs, with fuel, insurance, maintenance and a driver all paid by the employer, might be taxed on a perquisite of only around ₹40,000 for the whole year. There are few ways to receive a benefit of that size while being taxed on so little of it, which is why a company car is one of the most tax-efficient components an employer can offer — and why, if you have the choice between a car allowance in cash and an actual company car, the company car is usually far better after tax.

The calculator applies the correct fixed figure for your engine size, cost-bearing arrangement and driver, multiplies by the months the car was available, and shows the tax at your slab. Seeing that a substantial benefit costs only a few thousand rupees in tax is usually the point at which people stop treating the company car as a burden and start treating it as the efficient perk it is.

Interest-free and concessional loans

If your employer lends you money at no interest or below the market rate, the concession is a perquisite. It is valued as the interest you would have paid at the State Bank of India benchmark rate for the same type of loan — as on the first day of the year — on the outstanding balance, less any interest the employer actually charges you. So a ₹10 lakh interest-free loan against a 9% benchmark adds ₹90,000 to your salary; charge you 2% and the perquisite drops to the 7% gap, or ₹70,000.

Two exemptions matter. A small loan, where the aggregate outstanding does not exceed ₹20,000, carries no perquisite at all. And a loan for medical treatment of specified diseases is exempt, on the reasoning that it should not be taxed as a benefit. If either applies, the value is nil whatever rate you are charged, and the calculator switches the value off when you mark the loan exempt.

The valuation uses the maximum outstanding balance on the last day of each month across the year, so a loan you are steadily repaying is valued on a falling balance rather than the original amount. For a simple estimate the current balance or a rough average works well. Because the benchmark is a real lending rate, a genuinely interest-free loan is taxed close to the real benefit — unlike the car, this is not a perk that hides most of its value from tax, so it is worth knowing the cost before you take one.

Why the valuation rules matter to your package

Once you can see the assigned value of each perquisite against the real benefit, you can think about your salary package more sharply. Perks whose valuation sits below their real worth — the company car above all, and often company accommodation in an expensive city — deliver more to you after tax than the equivalent cash would, because you are taxed on less than you receive. Perks valued close to their real worth, like a plain interest-free loan, offer convenience but little tax advantage.

This also lets you check your employer's numbers. Perquisite values appear on your Form 16 and feed your taxable salary; an employer that values your accommodation or loan wrongly can over-tax you, and you would carry that until you noticed. Running your own numbers through the correct rule is the way to catch an over-valuation and have it corrected, or to reassure yourself that the figure withheld is right.

Finally, remember that perquisites interact with the rest of your tax position. They increase your taxable salary, which can affect your slab, your surcharge and the regime that suits you — and in the new tax regime many salary-linked exemptions fall away while perquisites remain taxable. The calculator gives you the perquisite value and its stand-alone tax cost; fitting that into your whole return, and choosing the right regime around it, is where an adviser earns their fee.

Using this calculator well

Pick the perquisite first, then be honest about the inputs that drive its value. For accommodation, use the right salary base — basic and the allowances that count, not your whole cost-to-company — and the correct population band for the city, because both move the number materially. For a car, the cost-bearing arrangement is what matters most: whether the employer or you pay for fuel and running changes the fixed figure by more than half.

For a loan, set the benchmark to the actual SBI rate for that kind of loan rather than a guess, since the whole value is the gap between that rate and what you are charged. And in every case, enter your true marginal rate so the tax cost is real; a perquisite that adds ₹1,20,000 to your salary costs a 30% taxpayer far more than a 5% one, and the tax figure, not the value, is what leaves your pocket.

Treat the rates, bands and fixed figures as the current rules and confirm them against those in force for your year before relying on them, because they are periodically revised. This is a computation to help you value a perk and check your Form 16, not a substitute for professional advice on structuring your package — but it will show you, clearly and in rupees, that no company benefit is ever quite free, and which ones come closest.