Taxation - DT Ch 03: Salaries - Test 3: answer key

Question 1 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Aryan Steels Ltd. employs Mr. Kabir Rao as its whole-time director throughout tax year 2026-27. He is a specified employee for the purposes of motor-car perquisite valuation. The company makes three separate vehicle arrangements during the year. First, the company provides him with a car having an engine capacity of 1.5 litres from 1 June 2026 to 31 March 2027. The vehicle is used partly for employment duties and partly for his personal purposes. The company bears all running and maintenance expenses and also provides a chauffeur throughout the period. Second, Kabir owns a motor car having an engine capacity of 2.0 litres. The company reimburses running, maintenance and chauffeur expenses of ₹1,65,000 during the same ten-month period. The car is used partly for employment duties and partly for personal purposes. The company maintains complete journey details showing that ₹1,20,000 of the reimbursement relates to employment duties and issues the prescribed certificate for this expenditure. Third, the company owns another car having an engine capacity of 1.8 litres, which Kabir uses exclusively for his personal purposes from 1 June 2026 to 31 March 2027. The company incurs running and maintenance expenditure of ₹48,000 and chauffeur remuneration of ₹12,000 during this period. The vehicle was purchased for ₹9,60,000. Kabir pays ₹30,000 to the company towards his personal use of this vehicle. The finance department proposes to apply the same fixed monthly valuation to all three arrangements. Kabir contends that employee-owned vehicles and vehicles used exclusively for personal purposes must be valued differently. Determine the applicable perquisite treatment for each arrangement under the prescribed valuation rules. Assume all amounts relate exclusively to the stated periods, and no other recovery or benefit is involved.

What is the taxable motor-car perquisite for Kabir in respect of the company-owned 1.5-litre car provided for ten months? The car is used partly for employment duties and partly for personal purposes, the employer bears running and maintenance expenses, and a chauffeur is provided throughout the period.

1. ₹80,000 (correct answer)
2. ₹50,000
3. ₹70,000
4. ₹90,000

Answer: A — ₹80,000

Explanation. For an employer-owned car used partly for employment duties and partly for personal purposes, with running and maintenance expenses borne by the employer, the monthly value is ₹5,000 for an engine capacity not exceeding 1.6 litres. Chauffeur provision adds ₹3,000 monthly. Thus, monthly value = ₹5,000 + ₹3,000 = ₹8,000. For ten months, perquisite = ₹8,000 × 10 = ₹80,000. The fixed valuation applies irrespective of actual running expenditure.

Where it goes wrong. Applying the ₹7,000 slab for an engine exceeding 1.6 litres, or omitting the additional chauffeur component.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3) of the Income-tax Rules, 2026

Question 2 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Kabir owns a 2.0-litre motor car, and Aryan Steels Ltd. reimburses ₹1,65,000 towards running, maintenance and chauffeur expenses for ten months. The vehicle is used partly for employment duties and partly for personal purposes. What is the taxable perquisite if the prescribed higher statutory-use allocation is not claimed?

1. ₹75,000
2. ₹65,000 (correct answer)
3. ₹1,00,000
4. ₹35,000

Answer: B — ₹65,000

Explanation. For an employee-owned car exceeding 1.6 litres used partly for employment duties and partly personally, the employer's reimbursement is reduced by ₹7,000 per month. Where a chauffeur is also provided, another ₹3,000 is deductible monthly. Thus, eligible reduction = (₹7,000 + ₹3,000) × 10 = ₹1,00,000. Taxable perquisite = ₹1,65,000 − ₹1,00,000 = ₹65,000. The calculation uses the ten-month period, not twelve months.

Where it goes wrong. Applying the employer-owned car's fixed perquisite value directly instead of reducing the reimbursement by the prescribed amount for an employee-owned car.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3), Sl. No. 2(b) of the Income-tax Rules, 2026

Question 3 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Kabir's employer maintains complete journey details and issues the prescribed certificate establishing that ₹1,20,000 of the ₹1,65,000 reimbursement for his employee-owned car relates to employment duties. What is the taxable perquisite after applying the documented higher allocation for employment use?

1. ₹40,000
2. ₹65,000
3. ₹45,000 (correct answer)
4. ₹1,20,000

Answer: C — ₹45,000

Explanation. Rule 15(3), Note (2) permits a higher deduction for employment-related use where complete journey details are maintained and the employer gives the prescribed certificate. Total reimbursement is ₹1,65,000. Documented employment-related expenditure is ₹1,20,000. Accordingly, taxable personal-use benefit = ₹1,65,000 − ₹1,20,000 = ₹45,000. The employee may use the documented higher amount instead of the standard monthly reduction, provided the stipulated documentation conditions are met.

Where it goes wrong. Using the standard monthly reduction even though the prescribed documentation permits a higher allocation for employment duties.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3), Note (2) of the Income-tax Rules, 2026

Question 4 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Kabir uses the third, company-owned 1.8-litre car exclusively for personal purposes. The company incurs ₹48,000 in running and maintenance expenses and ₹12,000 in chauffeur remuneration over ten months. The car cost ₹9,60,000, and Kabir contributes ₹30,000 towards its use. Determine the taxable perquisite.

1. ₹80,000
2. ₹1,40,000
3. ₹90,000
4. ₹1,10,000 (correct answer)

Answer: D — ₹1,10,000

Explanation. For a company-owned car used exclusively for personal purposes, taxable value includes actual running and maintenance costs, chauffeur remuneration and normal wear and tear. Wear and tear = ₹9,60,000 × 10% × 10/12 = ₹80,000. Total benefit = ₹48,000 + ₹12,000 + ₹80,000 = ₹1,40,000. Less employee recovery of ₹30,000. Taxable perquisite = ₹1,10,000. The actual-cost method replaces the fixed partly-personal-use valuation.

Where it goes wrong. Applying the fixed ₹7,000 monthly amount despite the vehicle being used exclusively for personal purposes.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3) of the Income-tax Rules, 2026

Question 5 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Nandini Real Estates Ltd. employs Mr. Arvind Khanna as its regional finance controller during tax year 2026-27. On 1 April 2026, the company grants him an interest-bearing personal loan of ₹4,80,000. The rate charged by the company is 4% per annum, whereas the State Bank of India charges 12% per annum on 1 April 2026 for comparable loans. Arvind pays interest to his employer at the agreed rate throughout the year. On 1 October 2026, he repays ₹1,80,000 of principal, leaving ₹3,00,000 outstanding for the remaining six months. No further repayment is made by 31 March 2027. The company also provides meal vouchers during working hours. These are paid vouchers, cannot be transferred to another person and can be used only at eating joints. The employer bears ₹280 per meal voucher, while Arvind contributes ₹50 per voucher. He receives 24 vouchers each month from October 2026 through March 2027. In addition, tea and light snacks are supplied at the workplace during working hours without any employee contribution. On the occasion of his marriage anniversary, Arvind receives two gift vouchers from the employer, valued at ₹9,000 and ₹7,000 respectively. Both are received during tax year 2026-27. The payroll team proposes to tax only the amount exceeding ₹15,000, while Arvind believes that both vouchers are exempt because neither individually exceeds that amount. The company requests a computation of the loan, meal-voucher and gift-voucher benefits, together with the treatment of workplace refreshments. Assume that all stated amounts were actually incurred or paid and that no other exclusion or recovery applies.

Calculate Arvind's perquisite arising from the concessional loan for tax year 2026-27. The outstanding principal at each month-end is ₹4,80,000 from April to September and ₹3,00,000 from October to March. The employer charges 4% interest, while SBI's comparable lending rate on 1 April 2026 is 12%. Arvind pays the contractual interest throughout the year.

1. ₹28,000
2. ₹31,200 (correct answer)
3. ₹34,800
4. ₹38,400

Answer: B — ₹31,200

Explanation. The interest differential is 12% − 4% = 8%. For April to September: ₹4,80,000 × 8% × 6/12 = ₹19,200. For October to March: ₹3,00,000 × 8% × 6/12 = ₹12,000. Aggregate perquisite = ₹19,200 + ₹12,000 = ₹31,200. The computation uses the maximum outstanding monthly balance at each month-end and deducts interest actually paid by the employee through the differential-rate method.

Where it goes wrong. Applying SBI's rate to the original loan amount throughout the year without considering the October principal repayment.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 6 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Arvind receives 24 meal vouchers per month for six months. Each voucher costs the employer ₹280, and Arvind contributes ₹50. The vouchers are paid, non-transferable and usable only at eating joints. Determine the taxable perquisite for the six-month period, considering the prescribed exemption for each meal.

1. ₹5,760
2. ₹2,880
3. ₹4,320 (correct answer)
4. ₹7,200

Answer: C — ₹4,320

Explanation. Employer's net expenditure per voucher = ₹280 − ₹50 = ₹230. The prescribed amount not treated as a perquisite is ₹200 per meal. Taxable amount per voucher = ₹230 − ₹200 = ₹30. Total vouchers = 24 × 6 = 144. Taxable perquisite = 144 × ₹30 = ₹4,320. The exemption is applied separately to each qualifying meal voucher, not once against the aggregate annual expenditure.

Where it goes wrong. Treating the entire voucher value as exempt because the vouchers satisfy the non-transferability and eating-joint conditions.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 7 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Arvind receives two gift vouchers from Nandini Real Estates Ltd. during tax year 2026-27. The first is valued at ₹9,000 and the second at ₹7,000. Both are received on separate occasions. What is the amount chargeable as a perquisite under the aggregate annual threshold?

1. ₹1,000
2. ₹15,000
3. ₹1,500
4. ₹16,000 (correct answer)

Answer: D — ₹16,000

Explanation. The annual aggregate value of gift vouchers is ₹9,000 + ₹7,000 = ₹16,000. Rule 15(5) provides that the value of the perquisite is taken as Nil only where the aggregate annual value is below ₹15,000. Since ₹16,000 exceeds that threshold, the entire ₹16,000 is taxable. The provision does not restrict taxation merely to the amount exceeding ₹15,000.

Where it goes wrong. Taxing only the excess of ₹1,000, or testing each voucher separately instead of aggregating gifts received during the tax year.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 8 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Apart from meal vouchers, Arvind receives tea and light snacks at his employer's workplace during working hours without contributing towards the cost. The employer provides these refreshments uniformly to employees and does not supply them as cash allowances. What is the tax treatment of this facility under the prescribed perquisite rules?

1. No perquisite value is chargeable. (correct answer)
2. The entire employer expenditure is taxable.
3. The benefit is taxable above ₹200 per employee.
4. The benefit is taxable only for directors.

Answer: A — No perquisite value is chargeable.

Explanation. Rule 15(5) specifically provides that tea or snacks supplied during working hours are not treated as a perquisite. Consequently, the employer's expenditure on the workplace refreshments does not enter taxable salary. This treatment is distinct from the ₹200-per-meal ceiling applicable to food and non-alcoholic beverages. Therefore, taxable value of tea and snacks is Nil, regardless of the stated absence of an employee contribution.

Where it goes wrong. Applying the ₹200 meal threshold to tea and snacks, which are separately excluded when supplied during working hours.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 9 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Ms. Nisha Verma is employed as a finance executive with Nandini Real Estates Ltd. The company has granted her employee stock options at different points in time. The options are exercisable at a predetermined price, and Nisha exercises three separate tranches during tax year 2026-27. The first tranche comprises 1,200 equity shares of Nandini Real Estates Ltd., which is listed on both NSE and BSE. Nisha exercises these options on 15 January 2027 at ₹300 per share. On that date, the opening price is ₹480 and closing price is ₹520 on BSE, which records the higher trading volume in the shares compared with NSE. The corresponding prices on NSE are not required for the computation. The second tranche consists of 500 equity shares of her former employer, Vikramaditya Tech Labs Pvt. Ltd., an unlisted company. Nisha exercises the options on 31 March 2027 at ₹350 per share. A merchant banker determines the fair market value at ₹570 per share on 15 October 2026. No other merchant banker valuation is available for this tranche. The third tranche consists of 300 listed equity shares of Nandini Real Estates Ltd. exercised on 15 March 2027 at ₹400 per share. No trading takes place on that date. The immediately preceding date on which the shares traded is 12 March 2027, when the closing price on the recognised exchange was ₹610. The options were initially granted on earlier dates, but Nisha pays the exercise price only when exercising them. The employer's payroll department proposes to use the grant-date share prices for all three tranches. Nisha seeks the valuation of the perquisite arising on exercise, having regard to the applicable listed-share and unlisted-share valuation methods, the trading-volume criterion, the preceding-date rule and the prescribed 180-day period.

Nisha exercises 1,200 options in Nandini Real Estates Ltd. on 15 January 2027. The equity shares are listed on NSE and BSE. BSE has the highest trading volume, with an opening price of ₹480 and closing price of ₹520. Nisha pays ₹300 per share on exercise. What is the taxable ESOP perquisite?

1. ₹1,80,000
2. ₹2,00,000
3. ₹2,40,000 (correct answer)
4. ₹3,00,000

Answer: C — ₹2,40,000

Explanation. For listed equity shares, FMV is the average of the opening and closing prices on the exchange recording the highest trading volume. FMV = (₹480 + ₹520)/2 = ₹500 per share. Exercise price = ₹300. Perquisite per share = ₹500 − ₹300 = ₹200. Total taxable perquisite = ₹200 × 1,200 = ₹2,40,000. The valuation uses BSE because it records the higher trading volume.

Where it goes wrong. Using the price quoted on the exchange with lower trading volume or treating the exercise price as the fair market value.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 10 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Nisha exercises 500 options in the unlisted equity shares of her former employer on 31 March 2027. The exercise price is ₹350 per share. A merchant banker determines FMV at ₹570 per share on 15 October 2026. No merchant banker valuation is available on the exercise date. What is the taxable perquisite?

1. ₹85,000
2. ₹1,00,000
3. ₹1,25,000
4. ₹1,10,000 (correct answer)

Answer: D — ₹1,10,000

Explanation. For unlisted equity shares, merchant banker FMV may be determined on the exercise date or an earlier date not more than 180 days before exercise. 15 October 2026 falls within that period before 31 March 2027. Perquisite per share = ₹570 − ₹350 = ₹220. Total value = ₹220 × 500 = ₹1,10,000. The earlier valuation is permissible because it satisfies the prescribed time condition.

Where it goes wrong. Rejecting an eligible earlier merchant banker valuation or using the grant date rather than the permitted valuation date.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 11 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Considering all three option exercises undertaken by Nisha, determine the aggregate taxable ESOP and sweat-equity-related perquisite for tax year 2026-27. The first tranche consists of 1,200 listed shares, the second of 500 unlisted equity shares and the third of 300 listed shares having no trading on the exercise date.

1. ₹4,13,000 (correct answer)
2. ₹3,50,000
3. ₹3,03,000
4. ₹2,40,000

Answer: A — ₹4,13,000

Explanation. The listed first tranche gives ₹2,40,000. The unlisted second tranche gives ₹1,10,000. For the third tranche, FMV is ₹610 using the preceding trading day's closing price; perquisite = (₹610 − ₹400) × 300 = ₹63,000. Aggregate perquisite = ₹2,40,000 + ₹1,10,000 + ₹63,000 = ₹4,13,000. Each tranche is valued using its applicable share-valuation method.

Where it goes wrong. Including only the listed-share tranche or applying one valuation method to all three tranches without considering their separate facts.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 12 · 2 marks · Taxation - DT Ch 03: Salaries · hard

For the third tranche, Nisha exercises 300 listed options on 15 March 2027 at ₹400 per share. No trade takes place on the exercise date. The immediately preceding date on which the shares traded is 12 March 2027, when the closing price on the recognised exchange was ₹610. Determine the perquisite arising from this tranche.

1. ₹60,000
2. ₹63,000 (correct answer)
3. ₹75,000
4. ₹84,000

Answer: B — ₹63,000

Explanation. Where there is no trading in a listed share on the exercise date, the closing price on the date closest to the exercise date and immediately preceding it is used. Thus, FMV is ₹610 per share. Exercise price is ₹400, giving a per-share benefit of ₹210. Taxable perquisite = ₹210 × 300 = ₹63,000. The opening-price and closing-price average is not used when there is no trading on the exercise date.

Where it goes wrong. Using the average of prices from an earlier trading date instead of the preceding date's closing price.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 13 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Mr. Pavan, a director of a company, is provided an employer-owned motor car having an engine capacity of 1.9 litres for four months during tax year 2026-27. The vehicle is used partly for employment duties and partly for his personal purposes. The employer bears all running and maintenance expenses, but no chauffeur is provided. What is the taxable motor-car perquisite for the four-month period under Rule 15(3)?

Mr. Pavan, a director of a company, is provided an employer-owned motor car having an engine capacity of 1.9 litres for four months during tax year 2026-27. The vehicle is used partly for employment duties and partly for his personal purposes. The employer bears all running and maintenance expenses, but no chauffeur is provided. What is the taxable motor-car perquisite for the four-month period under Rule 15(3)?

1. ₹14,000
2. ₹20,000
3. ₹35,000
4. ₹28,000 (correct answer)

Answer: D — ₹28,000

Explanation. The vehicle exceeds 1.6 litres and is partly used for employment duties and partly personally, with expenses borne by the employer. The prescribed monthly value is ₹7,000 where no chauffeur is supplied. For four months, value = ₹7,000 × 4 = ₹28,000. Pavan is a director, so the motor-car facility is taxable under the specified-employee provisions. Actual running costs do not replace the fixed monthly amount in this case.

Where it goes wrong. Applying the ₹5,000 monthly amount meant for smaller-engine vehicles.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3) of the Income-tax Rules, 2026

Question 14 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Aryan Steels Ltd. provides its director, Mr. Rohit, with a company-owned car used exclusively for his personal purposes for seven months. The running and maintenance expenditure is ₹1,12,000, while chauffeur remuneration is ₹28,000. The car cost ₹12,00,000. Rohit contributes ₹40,000 towards its use. Calculate the taxable perquisite after accounting for normal wear and tear.

Aryan Steels Ltd. provides its director, Mr. Rohit, with a company-owned car used exclusively for his personal purposes for seven months. The running and maintenance expenditure is ₹1,12,000, while chauffeur remuneration is ₹28,000. The car cost ₹12,00,000. Rohit contributes ₹40,000 towards its use. Calculate the taxable perquisite after accounting for normal wear and tear.

1. ₹1,70,000 (correct answer)
2. ₹1,40,000
3. ₹2,10,000
4. ₹1,30,000

Answer: A — ₹1,70,000

Explanation. Normal wear and tear = ₹12,00,000 × 10% × 7/12 = ₹70,000. Running and maintenance expenditure is ₹1,12,000, and chauffeur remuneration is ₹28,000. Aggregate expenditure and wear = ₹1,12,000 + ₹28,000 + ₹70,000 = ₹2,10,000. Less Rohit's recovery of ₹40,000. Taxable perquisite = ₹1,70,000. This method applies to an employer-owned car used exclusively for personal purposes.

Where it goes wrong. Ignoring normal wear and tear or applying the partly-personal-use fixed valuation to a vehicle used solely for personal purposes.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3) of the Income-tax Rules, 2026

Question 15 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Ms. Ritu owns a motor car having an engine capacity of 1.4 litres. Her employer reimburses ₹1,08,000 towards running and maintenance charges for nine months. The car is used partly for employment duties and partly for personal purposes. No chauffeur is employed, and the employer has not claimed any higher employment-use allocation under the documentation exception. Calculate the taxable perquisite.

Ms. Ritu owns a motor car having an engine capacity of 1.4 litres. Her employer reimburses ₹1,08,000 towards running and maintenance charges for nine months. The car is used partly for employment duties and partly for personal purposes. No chauffeur is employed, and the employer has not claimed any higher employment-use allocation under the documentation exception. Calculate the taxable perquisite.

1. ₹45,000
2. ₹63,000 (correct answer)
3. ₹90,000
4. ₹1,08,000

Answer: B — ₹63,000

Explanation. For an employee-owned car not exceeding 1.6 litres, used partly for employment duties and partly personally, the employer's reimbursement is reduced by ₹5,000 per month when no chauffeur is provided. The ten-month equivalent is not relevant because the actual period is nine months. Reduction = ₹5,000 × 9 = ₹45,000. Taxable perquisite = ₹1,08,000 − ₹45,000 = ₹63,000.

Where it goes wrong. Applying the 1.6-litre-plus category or using twelve months rather than the actual nine-month reimbursement period.

Authority. Section 17(1)(c) of the Income-tax Act, 2025; Rule 15(3), Sl. No. 2(b) of the Income-tax Rules, 2026

Question 16 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Mr. Sameer receives an interest-bearing personal loan of ₹2,25,000 from his employer on 1 April 2026. The company charges 5% per annum. SBI's comparable lending rate on 1 April 2026 is 11%. The loan remains outstanding at ₹2,25,000 on every month-end from April 2026 to March 2027. Sameer pays all contractual interest. Determine the taxable loan perquisite for the year.

Mr. Sameer receives an interest-bearing personal loan of ₹2,25,000 from his employer on 1 April 2026. The company charges 5% per annum. SBI's comparable lending rate on 1 April 2026 is 11%. The loan remains outstanding at ₹2,25,000 on every month-end from April 2026 to March 2027. Sameer pays all contractual interest. Determine the taxable loan perquisite for the year.

1. ₹11,250
2. ₹9,000
3. ₹13,500 (correct answer)
4. ₹27,000

Answer: C — ₹13,500

Explanation. The interest differential is 11% − 5% = 6%. The outstanding balance exceeds ₹2,00,000, so the small-loan exclusion is unavailable. Annual perquisite = ₹2,25,000 × 6% = ₹13,500. Equivalently, monthly value is ₹2,25,000 × 6%/12 = ₹1,125; annual amount = ₹1,125 × 12 = ₹13,500. Interest actually paid at the contractual rate has already been reflected through the rate differential.

Where it goes wrong. Applying the ₹2,00,000 threshold only to the excess of ₹25,000 instead of valuing the benefit on the outstanding loan once the threshold is exceeded.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 17 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. A company provides an interest-free loan of ₹1,95,000 to an employee for personal purposes during tax year 2026-27. The employee has no other loan from the employer, and no loan has been given to any member of the employee's household. SBI's comparable lending rate is 12% per annum. The loan remains outstanding throughout the year. What is the taxable perquisite under the prescribed loan valuation rule?

A company provides an interest-free loan of ₹1,95,000 to an employee for personal purposes during tax year 2026-27. The employee has no other loan from the employer, and no loan has been given to any member of the employee's household. SBI's comparable lending rate is 12% per annum. The loan remains outstanding throughout the year. What is the taxable perquisite under the prescribed loan valuation rule?

1. ₹23,400
2. ₹1,950
3. ₹2,00,000
4. Nil (correct answer)

Answer: D — Nil

Explanation. Rule 15(5) provides that no loan perquisite value is charged where the aggregate amount of the relevant loan does not exceed ₹2,00,000. The employee's only loan is ₹1,95,000, which falls below that threshold. Therefore, no interest calculation is required, even though the SBI rate is 12% and the employer charges no interest. Taxable perquisite = Nil.

Where it goes wrong. Calculating SBI interest automatically without first checking the prescribed aggregate loan threshold.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 18 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Mr. Dev grants a loan of ₹3,60,000 to his spouse through his employer's employee-loan facility. The SBI lending rate for a similar loan on 1 April 2026 is 12%, while the employer charges 6%. Month-end outstanding balances are ₹3,60,000 from April to June, ₹2,40,000 from July to December and ₹1,80,000 from January to March. Determine the taxable perquisite for the year.

Mr. Dev grants a loan of ₹3,60,000 to his spouse through his employer's employee-loan facility. The SBI lending rate for a similar loan on 1 April 2026 is 12%, while the employer charges 6%. Month-end outstanding balances are ₹3,60,000 from April to June, ₹2,40,000 from July to December and ₹1,80,000 from January to March. Determine the taxable perquisite for the year.

1. ₹15,300 (correct answer)
2. ₹18,000
3. ₹12,600
4. ₹21,600

Answer: A — ₹15,300

Explanation. A loan to a spouse, being a member of the employee's household, is covered. Interest differential = 12% − 6% = 6%. Aggregate monthly outstanding balances = (₹3,60,000 × 3) + (₹2,40,000 × 6) + (₹1,80,000 × 3) = ₹30,60,000. Monthly interest differential rate = 6%/12. Perquisite = ₹30,60,000 × 6%/12 = ₹15,300. The original loan exceeded ₹2,00,000, so the small-loan exclusion is unavailable.

Where it goes wrong. Ignoring loans made to household members or treating a balance falling below ₹2,00,000 later in the year as a fresh exempt loan.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 19 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. A company provides non-transferable paid meal vouchers to an employee for working-hour meals. The vouchers can be used only at eating joints. The employer bears ₹190 per meal, and the employee makes no payment. The employee receives 20 vouchers each month for eleven months during tax year 2026-27. Determine the taxable value of this meal benefit after considering the prescribed per-meal ceiling.

A company provides non-transferable paid meal vouchers to an employee for working-hour meals. The vouchers can be used only at eating joints. The employer bears ₹190 per meal, and the employee makes no payment. The employee receives 20 vouchers each month for eleven months during tax year 2026-27. Determine the taxable value of this meal benefit after considering the prescribed per-meal ceiling.

1. ₹10,000
2. Nil (correct answer)
3. ₹2,000
4. ₹3,800

Answer: B — Nil

Explanation. Each meal voucher has an employer-borne value of ₹190, which does not exceed the prescribed ₹200 per-meal limit. The vouchers are paid, non-transferable and usable only at eating joints, satisfying the stated conditions. Therefore, all 20 × 11 = 220 meals are covered by the exception. Since each meal is within the ceiling, taxable perquisite = Nil. The number of meals does not alter the individual per-meal ceiling.

Where it goes wrong. Aggregating the annual value of all vouchers and comparing it with ₹200, instead of applying the threshold separately to each meal.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 20 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Aryan Steels Ltd. provides meals at its business premises during working hours. The employer incurs ₹260 per meal, and an employee contributes ₹40 per meal. The employee receives 22 meals per month for eight months. Assuming that the facility satisfies the prescribed working-hours condition, calculate the aggregate taxable perquisite after applying the ₹200 per-meal limit.

Aryan Steels Ltd. provides meals at its business premises during working hours. The employer incurs ₹260 per meal, and an employee contributes ₹40 per meal. The employee receives 22 meals per month for eight months. Assuming that the facility satisfies the prescribed working-hours condition, calculate the aggregate taxable perquisite after applying the ₹200 per-meal limit.

1. ₹44,000
2. ₹8,800
3. ₹3,520 (correct answer)
4. ₹17,600

Answer: C — ₹3,520

Explanation. Net employer expenditure per meal = ₹260 − ₹40 = ₹220. The amount not treated as a perquisite is ₹200 per meal. Taxable value per meal = ₹220 − ₹200 = ₹20. Total meals = 22 × 8 = 176. Aggregate taxable benefit = 176 × ₹20 = ₹3,520. The employee's contribution is deducted before comparing the net meal value with the prescribed exemption threshold.

Where it goes wrong. Comparing the gross meal cost of ₹260 with the ₹200 ceiling without first reducing the employee's ₹40 contribution.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 21 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Ms. Ananya receives two ceremonial gift vouchers from her employer during tax year 2026-27. The first voucher is worth ₹7,500 and the second is also worth ₹7,500. Both are received in the employee's own name. What amount is taxable under the aggregate annual gift-voucher provision?

Ms. Ananya receives two ceremonial gift vouchers from her employer during tax year 2026-27. The first voucher is worth ₹7,500 and the second is also worth ₹7,500. Both are received in the employee's own name. What amount is taxable under the aggregate annual gift-voucher provision?

1. Nil
2. ₹500
3. ₹14,999
4. ₹15,000 (correct answer)

Answer: D — ₹15,000

Explanation. Aggregate gift voucher value = ₹7,500 + ₹7,500 = ₹15,000. Rule 15(5) treats the value as Nil only where the aggregate value during the tax year is below ₹15,000. Since the aggregate is exactly ₹15,000, the exclusion is unavailable. Consequently, the whole ₹15,000 is taxable as a perquisite, rather than only the amount exceeding the threshold.

Where it goes wrong. Reading the threshold as 'up to ₹15,000' when the prescribed exclusion applies only below ₹15,000.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 22 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Mr. Aakash receives gift vouchers worth ₹8,200 and ₹6,600 from his employer on separate occasions during tax year 2026-27. No other gifts or vouchers are provided to him or any member of his household during the year. What is the taxable perquisite value under the prescribed aggregate threshold?

Mr. Aakash receives gift vouchers worth ₹8,200 and ₹6,600 from his employer on separate occasions during tax year 2026-27. No other gifts or vouchers are provided to him or any member of his household during the year. What is the taxable perquisite value under the prescribed aggregate threshold?

1. Nil (correct answer)
2. ₹14,800
3. ₹15,000
4. ₹1,00,000

Answer: A — Nil

Explanation. Aggregate gift voucher value is ₹8,200 + ₹6,600 = ₹14,800. Rule 15(5) provides that no perquisite value is charged if the aggregate annual value is below ₹15,000. Since ₹14,800 is below that amount, the entire benefit is excluded from perquisite valuation. Taxable amount = Nil. The threshold is based on aggregate annual value, not the number of separate occasions on which gifts are received.

Where it goes wrong. Treating the entire ₹14,800 as taxable merely because two separate vouchers were received during the year.

Authority. Section 17(1)(e) of the Income-tax Act, 2025; Rule 15(5) of the Income-tax Rules, 2026

Question 23 · 2 marks · Taxation - DT Ch 03: Salaries · medium

Scenario. Mr. Kunal exercises options over 750 listed equity shares on 20 February 2027. The opening price on the relevant recognised stock exchange is ₹620, while the closing price is ₹680. Kunal exercises the options at ₹430 per share. There is trading in the shares on the exercise date, and the shares are listed on only one recognised stock exchange. Determine the taxable perquisite.

Mr. Kunal exercises options over 750 listed equity shares on 20 February 2027. The opening price on the relevant recognised stock exchange is ₹620, while the closing price is ₹680. Kunal exercises the options at ₹430 per share. There is trading in the shares on the exercise date, and the shares are listed on only one recognised stock exchange. Determine the taxable perquisite.

1. ₹1,42,500
2. ₹1,65,000 (correct answer)
3. ₹1,80,000
4. ₹1,95,000

Answer: B — ₹1,65,000

Explanation. FMV for a listed equity share is the average opening and closing price on the exercise date. FMV = (₹620 + ₹680)/2 = ₹650. Exercise price = ₹430. Perquisite per share = ₹650 − ₹430 = ₹220. Total perquisite = ₹220 × 750 = ₹1,65,000. Since there is trading on the exercise date and only one recognised exchange is involved, no preceding-date valuation is required.

Where it goes wrong. Using only the closing price of ₹680 instead of averaging the opening and closing prices.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 24 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. An employee exercises options over 400 unlisted equity shares on 31 March 2027 at ₹360 per share. A merchant banker has determined FMV of ₹560 per share on 15 October 2026 and ₹600 per share on 30 September 2026. No valuation is available on the exercise date. Identify the permissible valuation and compute the perquisite under Rule 15(6).

An employee exercises options over 400 unlisted equity shares on 31 March 2027 at ₹360 per share. A merchant banker has determined FMV of ₹560 per share on 15 October 2026 and ₹600 per share on 30 September 2026. No valuation is available on the exercise date. Identify the permissible valuation and compute the perquisite under Rule 15(6).

1. ₹1,20,000
2. ₹50,000
3. ₹80,000 (correct answer)
4. ₹90,000

Answer: C — ₹80,000

Explanation. An unlisted equity share may use a merchant banker valuation made on the exercise date or an earlier date not more than 180 days before exercise. The 15 October 2026 report is within 180 days before 31 March 2027, while 30 September 2026 is outside that period. Permissible FMV = ₹560. Perquisite = (₹560 − ₹360) × 400 = ₹80,000.

Where it goes wrong. Selecting the higher valuation report despite its date falling outside the prescribed 180-day period.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026

Question 25 · 2 marks · Taxation - DT Ch 03: Salaries · hard

Scenario. Ms. Shreya exercises options over 400 listed equity shares on 10 March 2027 at ₹500 per share. No transaction occurs in those shares on the exercise date. The immediately preceding trading date is 8 March 2027, when the closing price on the recognised exchange is ₹740. The shares are traded on only one recognised exchange. Calculate the taxable perquisite arising on exercise.

Ms. Shreya exercises options over 400 listed equity shares on 10 March 2027 at ₹500 per share. No transaction occurs in those shares on the exercise date. The immediately preceding trading date is 8 March 2027, when the closing price on the recognised exchange is ₹740. The shares are traded on only one recognised exchange. Calculate the taxable perquisite arising on exercise.

1. ₹74,000
2. ₹84,000
3. ₹1,00,000
4. ₹96,000 (correct answer)

Answer: D — ₹96,000

Explanation. Since there is no trading on the exercise date, the closing price on the date closest to the exercise date and immediately preceding it is adopted. Accordingly, FMV = ₹740 per share. Exercise price = ₹500 per share. Perquisite per share = ₹740 − ₹500 = ₹240. Aggregate perquisite = ₹240 × 400 = ₹96,000. The opening price on the preceding trading date is irrelevant under this no-trading exception.

Where it goes wrong. Averaging the opening and closing prices of the preceding trading date instead of using its closing price alone.

Authority. Section 17(1)(d) of the Income-tax Act, 2025; Rule 15(6) of the Income-tax Rules, 2026