Rule 3 of the Income Tax Rules prescribes the method of valuation of perquisites taxable in the hands of the employee. Some of these perquisites are described below:

• Value of Sweeper provided by the employer (Rule 3(3)):

The value of benefit to the employee or any member of his household resulting from the provision by the employer of services of a sweeper, gardener, a watchman or a personal attendant, shall be the actual cost to the employer.

• Supply of Gas, Electric Energy or Water (Rule 3(4)):

If the employer provides gas, electric energy or water to the employee for his household consumption then the perquisite value shall be determined as the amount incurred by the employer. Where such supply is made from resources owned by the employer, without purchasing them from any other outside agency, the value of perquisite shall be the manufacturing cost per unit incurred by the employer.

• Educational Facilities (Rule 3(5)):

The value of benefit to the employee resulting from the provision of free or concessional educational facilities for any member of his household shall be the amount of expenditure incurred by the employer.

Where the educational institution is itself maintained and owned by the employer and educational facility is provided or where such educational facility is provided in any institute by reason of employee’s employment with the employer:

• Where educational facility is provided to employee’s children the value of perquisite to the employee shall be the cost of such education in a similar institution in or near the locality less exemption of Rs. 1000 per month per child irrespective of number of children as reduced by the amount paid or recovered from the employee.
• Where educational facility is provided to a member of his household (other than children) the value of perquisite to the employee shall be the cost of such education in a similar institution in or near the locality as reduced by the amount paid or recovered from the employee.

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