Taxing the "Fringe Benefits"
A good salary package often includes more than just cash. You might get a company-leased car, rent-free accommodation, interest-free loans, or stock options (ESOPs).
The Income Tax Department calls these non-cash benefits "Perquisites" (or perks). Because they hold monetary value, the government taxes them just like your regular salary.
Where to Find Perquisites in Form 16
Your employer is responsible for calculating the value of your perquisites according to strict rules laid out in the Income Tax Act.
You don't have to do the math yourself. You will find the total value of your perquisites in Part B of your Form 16, specifically under the section detailing your Gross Salary.
Look for a line item that says: Value of perquisites under section 17(2)
Your employer will also provide an annexure (often called Form 12BA) that breaks down exactly how they calculated the value of each perk (e.g., ₹50,000 for a car, ₹2,00,000 for accommodation).
How to Report Perquisites in Your ITR
When you file your ITR, you must enter the exact value of the perquisites as shown in your Form 16.
On the income tax portal, when filling out the "Salary" schedule, you will see a specific field for "Value of perquisites as per section 17(2)". Enter the amount here. This amount will be added to your basic salary and allowances to form your Gross Salary.
Common Mistake: ESOP Double Taxation Confusion
If you exercised ESOPs (Employee Stock Ownership Plans) during the year, the difference between the Fair Market Value (FMV) of the shares and the exercise price you paid is treated as a perquisite.
Your employer will add this massive amount to your Form 16, resulting in a huge TDS deduction. Many employees panic, thinking they are being taxed twice when they eventually sell the shares.
Remember: The perquisite tax is on the allotment of shares. When you later sell the shares, you will pay Capital Gains tax only on the profit made above the FMV that was already taxed as a perquisite.
Every perquisite must be valued and reported under Section 17(2), and your employer must hand you a Form 12BA detailing each perk. Source: Income Tax Act Section 17(2); Rule 26A / Form 12BA.
What you should do
- Read the Section 17(2) perquisite value and the Form 12BA break-up from your employer
- Enter that exact value in the "perquisites u/s 17(2)" field of the salary schedule
- For ESOPs, keep the FMV and exercise-price details for the eventual capital-gains stage
- Confirm your gross salary in the ITR matches your Form 16
Automate the Data Entry
Typing perquisite values and salary breakdowns manually is tedious. When you upload your Form 16 to LastMinute ITR, our system automatically reads the perquisite values under Section 17(2) and places them in the correct fields, ensuring your gross salary matches the government's records perfectly.