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Perquisites On Account Of Accommodation Provided By The Employer
Value of rent free unfurnished accommodation
- For calculating the perquisite for rent free accommodation the employees have been divided into three categories viz. government employees, semi-government employees( which cover the employees of Reserve Bank of India, statutory corporation) and other employees.
- The factors which determine the value of rent free accommodation are the category of employees, the location of the accommodation, the fair rental value of the accommodation and the salary of the employee.
- Fair rental value is the rent which a similar accommodation would realise in the same locality or the municipal valuation whichever is higher [Explanation 2 to Rule 3(a)]. If the accommodation is owned by the employer, then the maintenance expenses of the garden, salary of the gardener and the maintenance expenses of the swimming pool are included in the FRV.
- Salary for the calculating the value of the rent free accommodation includes basic salary, bonus, fees and commission, dearness allowance, taxable allowances, income tax and professional tax of the employee, if paid by the employer.
- In the case of government employees, the value of perquisite of a rent free unfurnished accommodation is as per the rules framed by the government.
- In the case of semi-government employees in respect of properties located anywhere in India, the value of perquisite is 10% of salary or Fair Rental Value of accommodation, whichever is less.
- In the case of other employees, in respect of properties located at Delhi, Mumbai, Calcutta, and Chennai.
- If the fair rent is less than 10% of the salary, fair rent is taken as the taxable value of the perquisite.
- If the fair rent is 10% of salary or more but not more than 60% of salary, 10% of salary is taxable value of the perquisite.
- If the fair rent exceeds 60% of salary, fair rent minus 50% of salary is taxable.
Value of rent free furnished accommodation:
In case the employee has been provided rent free furnished accommodation, the valuation of the perquisite is determined by presuming that the accommodation is unfurnished. The value of the perquisite is determined as shown in the paragraph for calculating value of rent free unfurnished accommodation. After calculating the value in this fashion, 10% of the original cost of furniture is added if the furniture is owned by the employer or if the furniture is hired by the employer, actual hire charges payable are added to the value of rent free unfurnished accommodation.
Value of accommodation provided at concessional rate
- Where an accommodation has been provided by the employer to his employee and the employer charges a concessional rent from him, then it is an accommodation provided at a concessional rate and the value of the concession shall be the taxable perquisite. The value of this perquisite shall be determined in the following manner.
- Assume that the accommodation provided is a rent free accommodation (which may be furnished or unfurnished) and value the same as per the provisions discussed above.
- From the value determined under step-1, deduct the rent charged from the employee. The balance amount, if any, shall be the value of the accommodation provided at concessional rate.
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