Income tax (Twenty Second Amendment) Rules, 2025 – ₹4 Lakh/₹8 Lakh – The New Perquisite Tax Thresholds: Notification

Income tax (Twenty Second Amendment) Rules, 2025 – ₹4 Lakh/₹8 Lakh – The New Perquisite Tax Thresholds: Notification dated 18.08.2025. It introduces two new, specific financial thresholds related to the taxation of perquisites (non-salary benefits) provided by employers to their employees.

1. Rule 3C: It prescribes that for the purposes of Section 17(2)(iii)(c) of the Income-tax Act, 1961, the minimum “Salary” income threshold is set at ₹4 lakh. This likely pertains to rules for valuing certain perquisites (e.g., rent-free accommodation, car facilities) where their taxable value is calculated as a percentage of the employee’s salary. This rule defines what constitutes the minimum salary for that calculation.

2. Rule 3D: It prescribes that for the purposes of the proviso to Section 17(2)(vi) of the Income-tax Act, 1961, the maximum “Gross Total Income” threshold is set at ₹8 lakh. This likely applies to an exemption clause. If an employee’s total income from all sources is less than ₹8 lakh, certain perquisites provided by the employer may be exempt from tax.

In simple terms: The government has set two key income limits:

• ₹4 lakh is now the official minimum “salary” value used for calculating the tax on certain perks.

• ₹8 lakh is the official income limit below which employees may not have to pay tax on specific perks provided by their employer.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 18th August, 2025.
INCOME-TAX

G.S.R. 555(E).–––In exercise of the powers conferred by clause (2) of section 17 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules,1962, namely: ‒

1. (1) These rules may be called the Income tax (Twenty Second Amendment) Rules, 2025.

(2) They shall come into force on the date of their publication in Official Gazette.

2. In the Income-tax Rules, 1962, after rule 3B, the following rules shall be inserted, namely: ––

“3C. Salary income for the purposes of  item (c) of sub-clause (iii) of clause (2) of section 17 of the Act. ––

For the purposes of item (c) of sub-clause (iii) of clause (2) of section 17 of the Act, the prescribed income under the head “Salaries” shall be four lakh rupees.

3D. Gross total income for the purposes of clause (vi) of Proviso to clause (2) of section 17 of the Act. ––

For the purposes of clause (vi) of Proviso to clause (2) of section 17 of the Act, the prescribed gross total income shall be eight lakh rupees.”

[Notification No. 133/2025/F. No. 370142/27/2025-TPL]
KRITIKA JAIN, Under Secy. (Tax Policy and Legislation)

Note: The Income-tax Rules,1962 were published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii), vide number S.O. 969 (E) dated the 26th March, 1962 and was last amended vide notification number G.S.R. 553(E), dated the 14th August, 2025.