Tax on Interest-Free & Concessional Employer Loans: Rs 2 Lakh Limit and Medical Exemption

Shivani | Last updated: 28 August 2026

Save Share

Quick Summary

Employer-provided interest-free or concessional loans can be a valuable benefit, but they may have tax implications. The value of such a loan facility is generally treated as a taxable perquisite under the 'Salaries' head. However, there are key exemptions, including for loans up to Rs 2 lakh and those taken for specific medical treatments, though insurance reimbursements can affect the latter.

Introduction An interest-free or concessional loan from an employer may look like a valuable employee benefit, but it can also have tax implications. Under the provisions relating to salary and perquisites, the value of such a loan facility can become taxable in the hands of the employee. The tax rules are designed to ensure that employees receiving loans from their employers at rates lower than those available in the market are appropriately taxed on the benefit they receive. When Does a P

Daily Limit Reached

You have reached your daily limit of 2 Free Articles

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Community
Daily E-Newsletter
Unlimited Articles Access
Profile Visitors
Link Social Profiles
Featured Job Posts
Pro Badge
Expert GST Guidance
Unlimited Forum Replies
Download Content in PDF

1 Year PLAN

1999

(Excl. of GST ₹359)

BEST VALUE

2 Years PLAN

3499

(Excl. of GST ₹629)

3 Months PLAN

999

(Excl. of GST ₹179)

View all CCI PRO benefits

Already a PRO member? Login here for an ad-free experience.

953 Views Comment Share Income Tax Report

About the Author

Shivani

Finance Professional

I am passionate about simplifying finance, taxation, investing, insurance, and career trends into practical insights. Through my articles, I help readers make informed financial decisions, understand industry developments, and stay updated on personal finance, CA, and business topics.

View Articles

Comments :