ITR Filing FY25: Is Rent-free Housing, Cab Facility, and Sweat Equity Shares Taxable?

As the ITR filing 2025 deadline approaches, many salaried employees are wondering whether the perks they receive are taxable. On August 18, 2025, CBDT introduced two important changes in the Income Tax Rules, 1962. These rules set new income thresholds to decide when perquisites become taxable.

ITR Filing 2025: Rent-free Housing and Cab Facility Now Tax-Free Up to ₹4 Lakh Salary

Earlier, if an employee’s salary income exceeded ₹50,000 (excluding perks), perquisites like rent-free housing or cab facilities were taxable. The new Rule 3C raises this threshold significantly to ₹4 lakh.

This means salaried employees earning up to ₹4 lakh in salary (excluding non-cash perks) will not have to pay tax on such benefits. Only if their salary income crosses ₹4 lakh will these perks be considered taxable.

ITR Filing 2025: Sweat Equity Shares Taxable Only If Income Exceeds ₹8 Lakh

Sweat equity shares or specified securities given free or at concessional rates by an employer may be taxable under certain conditions. Rule 3D now sets the gross total income limit at ₹8 lakh for these perks.

Employees with total income below ₹8 lakh won’t have to pay tax on sweat equity shares received from their employer. Tax applies only if the total income crosses this threshold.

What Should Employees Know for ITR Filing FY25?

These new rules simplify the tax treatment of perquisites and provide relief by increasing the exemption limits. If your salary is less than ₹4 lakh, benefits like rent-free housing and cab facilities are generally not taxable. Likewise, if your total income is under ₹8 lakh, sweat equity shares you receive may not attract tax.

Read more: ITR Filing FY2025: Under-reporting High-value Transactions? Here’s What It Could Cost You!

Conclusion

For FY25 ITR filing, salaried employees should be aware of these new CBDT rules that clarify when perks like rent-free housing, cab facilities, and sweat equity shares become taxable. The higher income thresholds offer welcome relief and reduce confusion around perquisite taxation. Always consider these changes while calculating taxable income to ensure accurate and compliant tax filing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.