Valuation of Rent Free Accommodation
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In the course of the employment employer can provide the accommodation to its employee so that they can fulfill their duties more diligently without getting worried about the residential problem.
From Income tax perspective this facility is considered as perquisite and taxable under the head salary. But generally it raises the question what should be the value of that free accommodation, to solve this query income tax has given different conditions and formula through which we can calculate taxable value of rent free house.
Government employee (state /central Government):
| License fee determined by govt. | xxxxx |
| Add: 10% of cost of house appliances owned by employer | xxxxx |
|
Or |
|
|
Higher charges of house appliances hired by employer |
xxxxx |
| Less: any amount recovered from employee | xxxxx |
| Value of perquisite | xxxxx |
Non-Government employee:
- Accommodation owned by employer:
| Population |
% Salary |
| Upto 10 lakh |
7.5% of salary |
| Or | |
| Above 10 lakhs upto 25 lakhs |
10% of salary |
| Or | |
| Above 25 lakhs |
15% of salary |
| Add: if furnished house | |
| 10% of cost of furniture owned | xxxxx |
| Or | |
| Higher charges of furniture hired by employer | xxxxx |
| Value of perquisite | xxxxx |
-
Accommodation hired by employer:
15% of salary or actual hire charges
Whichever is lowerxxxxx Add: if furnished house 10% of cost of furniture owned by employer xxxxx Or
Higher charges of furniture hired by employer xxxxx Less: any amount recovered from employee xxxxx Value of perquisite xxxxx -
Accommodation given in hostel:
24% of salary or actual hire charges (Whichever is lower)
Note:
-
This is applicable only if accommodation is provided for 15 days and upto 15 days it will be tax free and after that it is taxable
-
Salary for the purpose of calculating it value of rent free accommodation will be calculated as per the below formula.
Salary means: Basic pay + Dearness Allowance (if) + commission + taxable allowance + leave encashment + any other monetary payment.
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