Yes, it is taxable as a perquisite under the Income Tax Act.

As per Section 17(2)(ii) of the Income Tax Act, if your employer provides you a house at a rent lower than the market value, the difference is considered a taxable benefit (perquisite).

The perquisite value is calculated as per Rule 3(1like this:

1. If employer owns the house:

   15% of your salary (in metro cities) or 10% or 7.5% in other cities (based on population) Less Rent actually paid by you = Taxable perquisite amount

2. If employer has rented the house:

   Lower of actual rent paid by employer OR above % of salary Less Rent paid by you = Taxable perquisite

👉 This amount is added to your salary income and taxed as per your slab.

A “Specified Employee” is a category of employee for whom certain perquisites (non-monetary benefits) provided by the employer are fully taxable under Section 17(2) of the Income Tax Act, 1961, read with Rule 3 of the Income Tax Rules, 1962.

As per Explanation (iv) to Section 17(2) of the Income Tax Act, an employee is called a Specified Employee if he/she meets any one of the following conditions:

✅ Conditions:

1. Director of the company

2. Employee with substantial interest (i.e., owns ≥20% of equity shares in the company)

3. Employee whose salary (excluding non-monetary benefits) exceeds ₹50,000 per annum

🟡 Note: Salary here includes basic, DA (if part of retirement), bonus, commission, allowances, etc.

Children Education Allowance (CEA) is partially exempt under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(2)(c) of the Income Tax Rules, 1962.

Exemption Limit (as per Rule 2BB):

• ₹100 per month per child

• For a maximum of 2 children

✅ Total exemption allowed = ₹100 × 2 × 12 = ₹2,400 per annum

Important Points:

• Applicable only if CEA is specifically mentioned in the salary structure.

• If you have more than 2 children, the exemption still applies to only 2 children.

• No requirement to submit bills unless specifically asked by Assessing Officer.