Income Tax Rules Amendment: CBDT Fixes ₹4 Lakh Salary and ₹8 Lakh Gross Income Thresholds [Read Notification]
CBDT fixes Rs. 4 lakh as salary income and Rs. 8 lakh as gross total income thresholds for taxation of perquisites under Section 17(2) of the Income Tax Act
Income Tax Rules Amendment
Income Tax Rules Amendment
The Central Board of Direct Taxes (CBDT), Ministry of Finance issued Notification No. 133/2025 [G.S.R. 555(E)] dated 18 August 2025, amending the Income Tax Rules, 1962 by introducing two new provisions that fix specific thresholds for salary income and gross total income.
According to the notification, these changes are part of the Income-tax (Twenty Second Amendment) Rules, 2025. They have been made under the powers conferred by Section 17(2) and Section 295 of the Income Tax Act, 1961. The rules take effect immediately upon their publication in the Official Gazette.
Two new rules (Rule 3C and Rule 3D) have been inserted after Rule 3B of the Income Tax Rules:
1. Rule 3C (Salary Income) – For the purposes of item (c) of sub-clause (iii) of clause (2) of Section 17, the prescribed “salaries” will be Rs. 4 lakh.
In practical terms, this means that for certain tax treatments of perquisites (benefits given by employers, such as housing or cars), a salary benchmark of Rs. 4 lakh will apply.
2. Rule 3D (Gross Total Income) – For the purposes of clause (vi) of the proviso to Section 17(2), the prescribed “gross total income” will be Rs. 8 lakh. This threshold will be used in calculating or limiting the taxability of specific perquisites.
Section 17(2) of the Income Tax Act deals with the definition of “perquisites” non-cash benefits provided by employers that form part of taxable salary. By fixing clear thresholds for salary and gross income, the government has introduced uniformity in how such perquisites are to be valued for tax purposes.
This will help reduce ambiguity in tax calculations especially for middle-income employees who receive perks from their employers. For many taxpayers, the rules will provide clarity on whether a particular benefit falls within the taxable net or is exempt, based on the Rs. 4 lakh and Rs. 8 lakh income cut-offs.
The notification has been signed by Kritika Jain, Under Secretary, Tax Policy and Legislation, on behalf of the Ministry of Finance.
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