Salaried employees' perquisites: Clarity on valuation of housing and cars in Budget 2026 wishlist

This article lists two such issues and the expectations from Budget 2026 regarding them:

1. Proper valuation base for housing accommodation perquisite

The Bombay Chambers of Commerce and Industry (BCCI) has suggested modifying the existing rules to provide for a uniform methodology for perquisite valuation in the year in which the employer provides accommodation owned by him for use to the employee.

Currently, rent-free accommodation, or accommodation provided at a concessional rate, by employers can be taxed as a "perquisite" in the hands of the employees.

Earlier, the valuation rule for employer-owned accommodation was based strictly on the percentage of salary. In cases like leased or hotel accommodation, the actual rent payable by employer was considered if it was lower than the specified percentage of salary.

However, the Finance Act 2023 amended the tax rules to provide for a uniform methodology for valuing the rent-free accommodation and concessional accommodation perquisites.

According to BCCI, the new rules only "partially addressed the difficulty posed by the existing rules". It said same type of accommodation provided to employees with two different scales of salary will have different perquisite value.

"The one with higher salary may be exposed to higher perquisite, when compared to the other during the first year of provision of accommodation and determination of value of such perquisite."

To remove the above anomaly, BCCI said, "It is prayed that the New Rules be modified to provide for uniform methodology for perquisite valuation in the year in which employer provides accommodation owned by him for use to the employee. The same may address the above-mentioned anomaly by considering a different base for perquisite valuation. For instance, the annual fair rental value can be taken at 1% or 2% of stamp duty ready reckoner value instead of valuing it as a percentage of salary or basis fair rental valuation."

2. Clarity on perquisite valuation for electric vehicles

KPMG has urged the government to introduce clear guidelines for valuing perquisites associated with electric vehicles and specify a separate valuation framework for such vehicles.

"Currently the value of perquisite arising from use of motor car provided by the employer to an employee is determined based on the cubic capacity of engine. However, with the growing emphasis on ESG, many organisations are actively promoting adoption of electric vehicles (EVs) for their employees. Therefore, it is recommended to introduce clear guidelines for valuing perquisites associated with EVs and specify a separate valuation framework for such vehicles," KPMG said in its pre-budget suggestions.

Divya Baweja, a tax expert at Deloitte, also said that the CBDT should consider immediately notifying regulations for EVs that will help employers value the perquisite and help employees understand the tax impact better.

"With the government’s encouragement, more employees are opting for electric vehicles as part of their employer’s car scheme. While the Income tax Rules provide a detailed mechanism for calculating the car perquisite for fuel vehicles, the same clarity is absent for EVs," Baweja said.