Section 17 → Section 22
Meaning of Salary, Perquisite, and Profits in lieu of Salary
Quick Answer
Section 17 of the Income Tax Act, 1961 (Meaning of Salary, Perquisite, and Profits in lieu of Salary) corresponds to Section 22 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 17
Under the Income Tax Act, 1961, Section 17 governs meaning of salary, perquisite, and profits in lieu of salary. Defines what constitutes salary, various perquisites (rent-free accommodation, ESOPs), and profits in lieu of salary.
The new code maps this to Section 22: the provision is retained and renumbered as Section 22 of the Income-tax Act, 2025, applying from 1st April 2026. Definition broadened. ESOPs taxation simplified and aligned directly with startup DPIIT recognition status.
On the ground, changes to Section 17 carry a Medium impact. Simplifies payroll processing for HR departments.
Sec 17
Provision Summary
Defines what constitutes salary, various perquisites (rent-free accommodation, ESOPs), and profits in lieu of salary.
Sec 22
Provision Summary
Definition broadened. ESOPs taxation simplified and aligned directly with startup DPIIT recognition status.
Key Changes & Highlights
- Valuation rules for Rent-Free Accommodation (RFA) streamlined and embedded directly into the primary section.
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Frequently Asked Questions
What does Section 17 of the Income Tax Act 1961 deal with?
Section 17 of the Income Tax Act, 1961 covers meaning of salary, perquisite, and profits in lieu of salary. Defines what constitutes salary, various perquisites (rent-free accommodation, ESOPs), and profits in lieu of salary.
Where does Section 17 of the ITA 1961 go under the Income-tax Act, 2025?
Section 17 of the Income Tax Act, 1961 maps to Section 22 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Definition broadened. ESOPs taxation simplified and aligned directly with startup DPIIT recognition status.
Why does the change to Section 17 matter for taxpayers?
The transition impact for Section 17 is rated Medium. Simplifies payroll processing for HR departments.
What are the key changes to Section 17 under the Income-tax Act, 2025?
Valuation rules for Rent-Free Accommodation (RFA) streamlined and embedded directly into the primary section. These points are specific to Section 17 (Meaning of Salary, Perquisite, and Profits in lieu of Salary).
Disclaimer: This mapping of Section 17 (Meaning of Salary, Perquisite, and Profits in lieu of Salary) to Section 22 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 17 is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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