Major Update on Travel and Medical Tax-Free Prerequisites in Budget 2025: Key Insights

The Union Budget 2025 has made it easier for more employees to qualify for tax-free prerequisites. This includes any expenses paid by the employer for travel outside India for medical treatment of the employee or their family members.

Perquisites are additional benefits employees receive on top of their regular salary.

The most common tax-free perquisites include travel allowances, medical and recreational facilities, company-provided laptops or desktops, and interest-free salary loans.

The Finance Minister proposed an amendment to Section 17 to allow the power to set rules that would increase the income limit for employees. This change would ensure that:

1. The amenities and benefits received by these employees are exempt from being treated as perquisites.
2. The expenses incurred by the employer for travel outside India for the medical treatment of the employee or their family member are not considered perquisites.

Currently, Section 17(2) includes the value of any benefit or amenity provided free of charge or at a concessional rate by an employer (including companies) to an employee whose salary does not exceed fifty thousand rupees.

An explanatory memorandum to Budget 2025 stated, “The income limits for calculating perquisites were set over 20 to 30 years ago. As a result, there is a need to update these limits to reflect changes in the standard of living and economic conditions.

The expenditure incurred by the employer for travel outside India on the medical treatment of an employee with a salary below a certain limit, or for his family member would not be treated as a perquisite. Such limits, presently at Rs 2,00,000 per annum, can now be prescribed by the Central Government.

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