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3. Valuation of perquisites, allowances benefits.-- (1) For the purposes of computing the income chargeable under the head "salary", the value of perquisites, allowances and benefits to be included in the said income shall be determined in accordance with the provisions of rule 4 to rule 18.

(1A) Where the income chargeable under the head "Salary" of an employee computed under sub-rule(1) is three hundred thousand rupees or more for any income yeas the value of perquisites, allowances and benefits shall be determined in a accordance with the provisions of rules 17 and 18A, wherever applicable.

(2) For the purpose of determining the value of perquisites, allowances and benefits under sub-rule (1),--
(a) "basic salary" means the pay and allowances payable monthly or otherwise, but does not include--
(i) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(ii) employer’s contribution to a recognised provident fund or a fund to which the Provident Funds Act, 1925 (XIX of 1925), applies and the interest credited on the accumulated balance of an employee in such fund;

(iii) allowances which are exempt form the payment of tax; and

(iv) allowances, perquisites, annuities and benefits referred to in the said sub-rule;

(b) "salary" means remuneration or compensation for services rendered, paid or to be paid at regular intervals and includes overseas, dearness or cost of living allowance by whatever name it may be described, and bonus or commission which is payable to an employee in accordance with the terms of his employment as remuneration or compensation for services but does not include the employer's contribution to a recognised provident or superannuation fund or gratuity fund or any other sum which does not enter into the computation for pension or retirement benefits; and

(c) "employee" includes a director of a company working whole-time for one company.

4. House rent allowances receivables in cash.-- Where the house rent allowance is receivable by the employee in cash, the amount, if any, by which the time scale of the basic salary shall be included in his income:

Provided that where there is no time scale, the basic salary of a particular employee against a particular post or office shall be construed to be the minimum of time scale of basic salary.

5. Rent-free unfurnished accommodation.-- Where rent-free accommodation is provided to an employee, there shall be included, in the total income of such employee, an amount calculated as under:-

Provided that where there is no time scale, the basic salary of a particular employee against a particular post or office shall be construed to be the minimum of the time scale of basic salary.

Explanation.-- For the purposes of this rule, free unfurnished accommodation includes electric fan, built-in cupboards, cooking range and water heater provided under the terms of the lease. It also includes free services of watchman, gardener and sweeper in an independent house and such services on part time basis where accommodation is provided in a block of flats or apartments. No addition on account of these benefits would be made to the rental value of the accommodation. Similarly no addition would be made where electricity is provided by the employer from his own generators and no meters have been installed.

6. Rent free furnished accommodation.-- Where rent free furnished accommodation is provided to the employee, an amount equal to 10 per cent of his salary over and above the amount determined for inclusion under rule 5 shall be added to his income.

Explanation.-- For the purposes of this rule,

"free furnished accommodation" in relation to rent-free accommodation, includes basic furnishings, appliances for cooking, refrigeration, heating and cooling and the repairs, (but does not include items of entertainment such as TV sets, Radios, Cassette players, etc.) in addition to facilities available in respect of ‘unfurnished accommodation’ under rule 5.

7. Accommodation hired by the employee with rent payable by the employer.-- Where the accommodation is hired by the employee in his own name but the rent is payable by the employer, the amount includible in the salary shall be determined under the rule 5 of 6, as the case may be the employee will, however, be allowed credit for the amount, if any, paid by him to the employer or deducted from his salary in lieu of this benefit.

8. Accommodation provided at a concessional rate.-- Where the accommodation is provided to the employee, other than a person in the civil or military employment of the government, at a concessional rate, the difference between the rent actually paid by him and the amount determined to be includible in an employee’s salary under rule 5 or rule 6 shall be added to his income.

9. House rent allowance receivable in addition to accommodation, etc.-- Where any house rent allowance is receivable by the employee in addition to the benefits referred to in rules 5, 6, 7 or 8, the whole amount of the allowance shall be added in his income in addition to the amount computed under any of the said rules.

10. Conveyance allowance receivable in cash with no conveyance facility.-- Where no conveyance is provided by the employer nor any conveyance owned or maintained by the employee is used by him and conveyance allowance is receivable by him in cash, the allowance so receivable in excess of Rs 3600 per annum or in excess of the actual expenditure incurred by him wholly, necessarily and exclusively in the performance of the duties of the office held by him, whichever of the two latter sums is the higher, shall be included in his income.

11. Conveyance provided exclusively for personal or private use.-- Where the conveyance is provided by the employer for the use of the employee exclusively for personal or private purposes, there shall be included in the employee’s income an amount equal to--

(1) the sum actually expended by the employer on running and maintenance of the conveyance (including normal depreciation, where the conveyance is owned or the amount of rental where the conveyance is hired by the employer) if the conveyance is used by one employee; and

(2) the sum arrived at by dividing the amount as computed under sub-rule (1) by the number of persons entitled to use the conveyance, if the conveyance is used by more than one employee.

12. Additional conveyance allowance.-- Where any conveyance allowance is receivable by an employee in addition to the perquisite mentioned in rule 11, the whole amount of such allowance plus the amount determined under the rule 11 shall be included in his income.

13. Conveyance used partly for personal and partly for business purposes.-- Where the conveyance is used by the employee partly for his personal and partly for business purposes, there shall be included in his income,--

(1) where the conveyance is owned or hired by the employer and its running (including hire and maintenance) costs are also borne by the employer and the conveyance issued exclusively by one person, 50 per cent of the sum actually expended on the running of the conveyance (including maintenance and normal depreciation where the conveyance is owned or the amount of rental where it is hired by the employer) or Rs. 3600, which ever is the less;

(2) where the conveyance is owned or hired by the employer and its running (including hire and maintenance) costs are also borne by the employer and the conveyance is used by more than one person, the sum arrived at by dividing the amount representing 50 percent of the some actually expended by the employer on the running of the conveyance (including maintenance and normal depreciation where the conveyance is owned or the amount of rental where it is hired by the employer) by the number of such persons or Rs 2400 whichever is the less;

(3) where the conveyance is owned or hired by the employer and the running cost is borne by the employee, the amount, if any, by which the conveyance allowance paid by the employer exceeds Rs 2400 or 7.5 per cent of the basic salary, whichever of these two sums is the higher.

(4) where the conveyance is owned by the employee and its running (including maintenance) costs are also borne by him the amount by which the conveyance allowance paid by the employer exceed Rs 3600 or 10 per cent of the basic salary, whichever of these two sums is the higher; and

(5) where the conveyance is owned by the employee and its running (including maintenance) costs are also borne by employer, the amount if any, by which the conveyance allowance paid by the employer exceeds Rs 1200 or 2.5 per cent of the basic salary, whichever of these two sums is the higher.

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