Q.Mr. B is a State Government employee provided with rent-free accommodation. The licence fee for this accommodation, as determined by the State Government under its own rules, is ₹2,000 per month. Mr. B pays ₹500 per month to the Government towards this accommodation. Compute the value of this perquisite for AY 2026-27.

A perquisite [Section 17(2)] is a benefit or amenity attached to an employee's office, granted in addition to salary. Rent-free accommodation [Rule 3(1)] is valued differently depending on the employer: for a Government employee, it is simply the Government's own licence fee, minus rent paid; for a private-sector employee in employer-owned, unfurnished accommodation, it is a percentage of "salary" — 10%, 7.5% or 5%, depending on the city's 2011-census population band, rates that were revised downward by the CBDT with effect from 1st September 2023. Furnished accommodation adds 10% per annum of the cost of employer-owned furniture, or the actual hire charge for employer-hired furniture, to this unfurnished value. Education-related perquisites [Rule 3(5)] follow a distinctive cliff-edge rule: free, concessional or reimbursed education …