Perquisites - Accommodation (Rent Free / Concessional) - Rule 3(1) - Income Tax - Ready Reckoner - Income Tax

Rule 3(1) : VALUATION OF ACCOMMODATION From 01.09.2023 UNFURNISHED ACCOMMODATION 1. Provided by the Central / State Govt : License fee determined by Govt. as reduced by the rent actually paid by the employee. is the Taxable Valuable 2. Provided by any other employer : (a) where the accommodation owned by the employer [ Population of city as per 2011 census ] Population 15 Lakhs = 5 % of Salary* 15 lakhs Population 40 lakhs = 7.5 % of Salary* Population 40 Lakhs = 10 % of salary* (b) Where the accommodation is taken on Leased or rented by the employer Taxable Value is lower of the following below mentioned as reduced by the rent paid by the employee. Lease / Rent paid by the employer or 10% of Salary Where the accommodation is owned or taken on lease or rent by the employer and the same accommodation is continued to be provided to the same employee for more than one previous year, the amount calculated in accordance with SL. No.2(a) or 2(b) shall not exceed the amount so calculated for the first previous year, as multiplied by the amount which is a ratio of the Cost Inflation Index for the previous year for which the amount is calculated and the Cost Inflation Index for the previous year in which the accommodation was initially provided to the employee. 3. Accommodation in a hotel is not a taxable perquisite if the following two conditions are satisfied : The period of such accommodation does not exceed in aggregate 15 days and Such accommodation has been provided on transfer of the employee from one place to other. * Salary is to be taken for the period during which the said accommodation was occupied in the previous year. FURNISHED ACCOMMODATION Provided by the Central / State Govt. to the employees / any other employer provide accommodation to the employee whether it is owned or leased or rent Value of accommodation determined as if it is an unfurnished accommodation as above and 10% p.a. of the cost of furniture if owned by the employer and / or the actual hire charges paid / payable, if hired from third party, as reduced by Any charges paid / payable for such furniture by employee during the P/Y (if any) Accommodation in a hostel (Provided by any employer) TV = Lower of: 24% of salary for the period during which such accommodation is provided during P/Y Actual charges paid or payable to such hotel by the employer Salary for the purpose of Valuation of Accommodation Includes: Does not includes: Basic pay Dearness Allowance (if forms part of salary for retirement benefits) Bonus or fees Commission payable monthly or otherwise All other taxable allowances excluding exempted part Any monetary payment from one or more employees Dearness Allowance (if do not form part of salary for retirement benefits) Employer s contribution to the provident fund account of the employee Value of perquisites specified u/s 17(2) of the Act . Perquisites is not taxable in following cases: 1. Any accommodation temporarily provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site (i) which, having plinth area not exceeding 1000 square feet, is located not less than 8 KMs away from the local limits of any municipality or a cantonment board; or (ii) which is located in a remote area 2. Hotel accommodation for 15 days ( in aggregate in a previous year ) can be provided immediately after transfer at the new location as tax free perquisite. 3. If an employee is transferred and housing facility is provided to him at the new location (he has yet to vacate a house given at the old location), for a period of 90 days immediately after transfer only one house (at the option of the employee at the old location or new location) is chargeable to tax and the other one will be tax -free. 4. Further, Rent free house is not taxable if it is provided to a High Court Judge ,Supreme Court Judge, Union Minister, Leader of Opposition in Parliament, An official in Parliament and serving Chairman and member of UPSC. Upto 31.08.2023 UNFURNISHED ACCOMMODATION 1. Provided by the Central / State Govt : License fee determined by Govt. as reduced by the rent actually paid by the employee. is the Taxable Valuable 2. Provided by any other employer:- Where the accommodation is owned by the employer [ Population of city as per 2001 census ] Population 10 Lakhs = 7.5% of Salary* 10 lakhs Population 25 lakhs = 10% of Salary* Population 25 Lakhs = 15% of salary* where the accommodation is taken on lease or rent by the employer Taxable Value of perquisite is lower of the following below mentioned as reduced by the rent paid by the employee. Lease / Rent paid by the employer or 15% of Salary 3. Accommodation in a hotel is not a taxable perquisite if the following two conditions are satisfied: The period of such accommodation does not exceed in aggregate 15 days and Such accommodation has been provided on transfer of the employee from one place to other. * Salary is to be taken for the period during which the said accommodation was occupied in the previous year. FURNISHED ACCOMMODATION Provided by the Central / State Govt. to the employees / any other employer provide accommodation to the employee whether it is owned or leased or rent Value of accommodation determined as if it is an unfurnished accommodation as above and 10% p.a. of the cost of furniture if owned by the employer and / or the actual hire charges paid / payable, if hired from third party, as reduced by Any charges paid / payable for such furniture by employee during the P/Y (if any) Accommodation in a hotel (Provided by any employer) TV = Lower of: 24% of salary for the period during which such accommodation is provided during P/Y Actual charges paid or payable to such hotel by the employer Salary for the purpose of Valuation of Accommodation Includes: Does not includes: Basic pay Dearness Allowance (if forms part of salary for retirement benefits) Bonus or fees Commission payable monthly or otherwise All other taxable allowances excluding exempted part Any monetary payment from one or more employees Dearness Allowance (if do not form part of salary for retirement benefits) Employer s contribution to the provident fund account of the employee Value of perquisites specified u/s 17(2) of the Act . Perquisites is not taxable in following cases: Any accommodation temporarily provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site (i) which, having plinth area not exceeding 800 square feet, is located not less than 8 KMs away from the local limits of any municipality or a cantonment board; or (ii) which is located in a remote area Hotel accommodation for 15 days ( in aggregate in a previous year ) can be provided immediately after transfer at the new location as tax free perquisite. If an employee is transferred and housing facility is provided to him at the new location (he has yet to vacate a house given at the old location), for a period of 90 days immediately after transfer only one house (at the option of the employee at the old location or new location) is chargeable to tax and the other one will be tax -free. Further, Rent free house is not taxable if it is provided to a High Court Judge ,Supreme Court Judge, Union Minister, Leader of Opposition in Parliament, An official in Parliament and serving Chairman and member of UPSC.