## Valuation of Domestic Servants [Rule 3(3)] and Gas/Electricity/Water [Rule 3(4)]
The central distinction in both perquisites is who engages/contracts the service, because that decides which employees are taxed.
### Domestic Servants [Rule 3(3)]
| Who engages the servant? | Taxable for | Gross Perquisite Value |
|---|---|---|
| Employee engages, employer pays/reimburses wages | All employees | Actual amount reimbursed |
| Employer engages and provides service to employee | Specified employees only | Actual salary cost incurred by employer |
Any amount recovered from the employee is deducted.
### Gas, Electricity or Water [Rule 3(4)]
Taxability — depends on whose name the connection is in:
- Connection in the employee's name, employer reimburses → perquisite for all employees.
- Service provided in the employer's name → perquisite for specified employees only.
Value of benefit:
| Source | Gross Perquisite Value |
|---|---|
| Employer pays an outside agency | Amount paid by the employer |
| Supplied from employer's own resources | Manufacturing cost per unit incurred by the employer |
Any amount recovered from the employee is deducted.
### The unifying principle
Whenever the employee contracts the service and the employer merely foots the bill (reimbursement), it is taxed in all employees' hands. Whenever the employer contracts and provides the facility, it is a perquisite only for specified employees.