Perquisite on account of free or concessional education shall be valued in the manner below:
(A) where the employer does not own/maintain the educational institution:
The actual cost incurred by the employer will the taxable value of perquisite.
(B) where such educational institution itself is maintained and owned by the employer:
The taxable value of perquisites will be the cost of such education in a similar location or nearby locality and any amount paid by the employee for such facilities or services shall be reduced from the above amount. However, if the amount does not exceed Rs.1000 pm then nothing is taxable.
Reference:
As Per Rule 3(5), Of the Income Tax Act, 1961:
Rule 3.
For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules,—
(5) The value of benefit to the employee resulting from the provision of free or concessional educational facilities for any member of his household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf or where the educational institution is itself maintained and owned by the employer or where free educational facilities for such member of employees’ household are allowed in any other educational institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. Where any amount is paid or recovered from the employee on that account, the value of benefit shall be reduced by the amount so paid or recovered :
Provided that where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, nothing contained in this sub-rule shall apply if the cost of such education or the value of such benefit per child does not exceed one thousand rupees per month.