diff --git a/tests/catch/unit/rtc/headers/test_header1.h b/tests/catch/unit/rtc/headers/test_header1.h
new file mode 100644
index 0000000000..6cb37c331c
--- /dev/null
+++ b/tests/catch/unit/rtc/headers/test_header1.h
@@ -0,0 +1,4 @@
+#ifndef HIPRTC_TEST_HEADER1_H
+#define HIPRTC_TEST_HEADER1_H
+typedef float real;
+#endif //HIPRTC_TEST_HEADER1_H
diff --git a/tests/catch/unit/rtc/headers/test_header2.h b/tests/catch/unit/rtc/headers/test_header2.h
new file mode 100644
index 0000000000..16b639dd34
--- /dev/null
+++ b/tests/catch/unit/rtc/headers/test_header2.h
@@ -0,0 +1,4 @@
+#ifndef HIPRTC_TEST_HEADER2_H
+#define HIPRTC_TEST_HEADER2_H
+typedef float* realptr;
+#endif //HIPRTC_TEST_HEADER2_H
diff --git a/tests/catch/unit/rtc/includepath.cc b/tests/catch/unit/rtc/includepath.cc
new file mode 100644
index 0000000000..e70c0eebb7
--- /dev/null
+++ b/tests/catch/unit/rtc/includepath.cc
@@ -0,0 +1,128 @@
+#include <hip_test_common.hh>
+
+#include <hip/hiprtc.h>
+#include <hip/hip_runtime.h>
+
+#include <cassert>
+#include <cstddef>
+#include <memory>
+#include <iostream>
+#include <iterator>
+#include <vector>
+#include <fstream>
+
+static constexpr auto NUM_THREADS{128};
+static constexpr auto NUM_BLOCKS{32};
+
+// This test verifies hiprtc compilation by passing include path option using -I with spaces
+// before the path. eg: -I   ../ or -I /path/to/headers etc.
+
+TEST_CASE("Unit_hiprtc_includepath") {
+  using namespace std;
+
+  string saxpy = "";
+  {
+    fstream f("saxpy.h");
+    if (f.is_open()) {
+      size_t sizeFile;
+      f.seekg(0, fstream::end);
+      size_t size = sizeFile = (size_t)f.tellg();
+      f.seekg(0, fstream::beg);
+      saxpy.resize(size, ' ');
+      f.read(&saxpy[0], size);
+      f.close();
+   }
+ }
+
+  hiprtcProgram prog;
+  hiprtcCreateProgram(&prog,         // prog
+                      saxpy.c_str(), // buffer
+                      "saxpy.cu",    // name
+                      0, nullptr, nullptr);
+
+  hipDeviceProp_t props;
+  int device = 0;
+  HIP_CHECK(hipGetDeviceProperties(&props, device));
+#ifdef __HIP_PLATFORM_AMD__
+  string sarg = string("--gpu-architecture=") + props.gcnArchName;
+#else
+  string sarg = string("--gpu-architecture=compute_")
+    + to_string(props.major) + to_string(props.minor);
+#endif
+  // Need to find the header files from the include path
+  // It is set to headers in the current directory here
+  const char* options[] = {
+      sarg.c_str(), "-I./headers"
+  };
+
+  hiprtcResult compileResult{hiprtcCompileProgram(prog, 2, options)};
+  size_t logSize;
+  HIPRTC_CHECK(hiprtcGetProgramLogSize(prog, &logSize));
+  if (logSize) {
+    string log(logSize, '\0');
+    HIPRTC_CHECK(hiprtcGetProgramLog(prog, &log[0]));
+    cout << log << '\n';
+  }
+  REQUIRE(compileResult == HIPRTC_SUCCESS);
+  size_t codeSize;
+  HIPRTC_CHECK(hiprtcGetCodeSize(prog, &codeSize));
+
+  vector<char> code(codeSize);
+  HIPRTC_CHECK(hiprtcGetCode(prog, code.data()));
+
+  HIPRTC_CHECK(hiprtcDestroyProgram(&prog));
+
+  // Do hip malloc first so that we donot need to do a cuInit manually before calling hipModule APIs
+  size_t n = NUM_THREADS * NUM_BLOCKS;
+  size_t bufferSize = n * sizeof(float);
+
+  float *dX, *dY, *dOut;
+  HIP_CHECK(hipMalloc(&dX, bufferSize));
+  HIP_CHECK(hipMalloc(&dY, bufferSize));
+  HIP_CHECK(hipMalloc(&dOut, bufferSize));
+
+  hipModule_t module;
+  hipFunction_t kernel;
+  HIP_CHECK(hipModuleLoadData(&module, code.data()));
+  HIP_CHECK(hipModuleGetFunction(&kernel, module, "saxpy"));
+
+  float a = 5.1f;
+  unique_ptr<float[]> hX{new float[n]};
+  unique_ptr<float[]> hY{new float[n]};
+  unique_ptr<float[]> hOut{new float[n]};
+  for (size_t i = 0; i < n; ++i) {
+    hX[i] = static_cast<float>(i);
+    hY[i] = static_cast<float>(i * 2);
+  }
+
+  HIP_CHECK(hipMemcpy(dX, hX.get(), bufferSize, hipMemcpyHostToDevice));
+  HIP_CHECK(hipMemcpy(dY, hY.get(), bufferSize, hipMemcpyHostToDevice));
+
+  struct {
+    float a_;
+    float* b_;
+    float* c_;
+    float* d_;
+    size_t e_;
+  } args{a, dX, dY, dOut, n};
+
+  auto size = sizeof(args);
+  void* config[] = {HIP_LAUNCH_PARAM_BUFFER_POINTER, &args, HIP_LAUNCH_PARAM_BUFFER_SIZE, &size,
+                    HIP_LAUNCH_PARAM_END};
+
+  hipModuleLaunchKernel(kernel, NUM_BLOCKS, 1, 1, NUM_THREADS, 1, 1, 0, nullptr, nullptr, config);
+
+  HIP_CHECK(hipMemcpy(hOut.get(), dOut, bufferSize, hipMemcpyDeviceToHost));
+
+  hipFree(dX);
+  hipFree(dY);
+  hipFree(dOut);
+
+  HIP_CHECK(hipModuleUnload(module));
+
+  for (size_t i = 0; i < n; ++i) {
+    INFO("For " << i << " Value: " << fabs(a * hX[i] + hY[i] - hOut[i])
+                << " with: " << (fabs(hOut[i] * 1.0f) * 1e-6));
+    REQUIRE(fabs(a * hX[i] + hY[i] - hOut[i]) <= fabs(hOut[i]) * 1e-6);
+  }
+}
diff --git a/tests/catch/unit/rtc/saxpy.h b/tests/catch/unit/rtc/saxpy.h
new file mode 100644
index 0000000000..6e1e88f0ac
--- /dev/null
+++ b/tests/catch/unit/rtc/saxpy.h
@@ -0,0 +1,11 @@
+#include "test_header1.h"
+#include "test_header2.h"
+
+extern "C"
+__global__
+void saxpy(real a, realptr x, realptr y, realptr out, size_t n) {
+    size_t tid = blockIdx.x * blockDim.x + threadIdx.x;
+    if (tid < n) {
+        out[tid] = a * x[tid] + y[tid];
+    }
+}