Q.Mr. D's employer provides free education, in a school maintained by the employer, to Mr. D's two children — the employer's cost of providing this works out to ₹800 per month per child. The employer also directly pays ₹1,500 per month towards the education of Mr. D's third child, who studies at an outside private school with no connection to the employer. Compute the taxable value of these education perquisites for AY 2026-27.

This is a NIL-or-full rule, not a partial exemption like Children Education Allowance — crossing ₹1,000 per month per child makes the WHOLE amount taxable, not just the excess.

Under Rule 3(5), free education for an employee's child in an institution owned/maintained by the employer — or the employer otherwise bearing the child's education cost — is valued at NIL as long as the cost per child does not exceed ₹1,000 per month, with no limit on the number of children; if the cost per child EXCEEDS ₹1,000 per month, the ENTIRE amount becomes taxable, not merely the excess.

Children 1 and 2 (employer-maintained school, cost ₹800 per month per child): since ₹800 does not exceed the ₹1,000-per-month threshold, the value of this benefit is NIL for both children. …

Taxing only the ₹500-per-month excess for the third child (treating this like the Children Education Allowance slab rule) — Rule 3(5) is a cliff-edge rule: crossing ₹1,000 per month per child makes the ENT …