Example:- X, a director-employee of a private sector company based at Indore (population: 24Lakhs), draws ₹ 90,000 p.m. as basic salary. Other allowances and benefits attached to his office are: DA (forming part of Salary): 20% of basic salary; bonus: 30% of basic salary; commission: 800 p.m. and rent free house (lease rent paid by the employer: ₹ 40,000 p.m.) Determine the value of perquisite.

Chapter No. 13 - Salary - Perquisites - Accommodation (Rent Free / Concessional) - Rule 3(1)

.  Calculation of salary for the purpose of RFA: Basic Salary + DA + Commission

Basic Salary = 90,000 x 12                                                                  = 10,80,000

DA = 20% of 10,80,000                                                                       = 2,16,000

Commission = 800 x 12                                                                       = 9,600

Bonus = 30% x 10,80,000                                                                    = 3,24,000

TOTAL                                                                                                 16,29,600

TAXABLE VALUE IS LOWER OF THE FOLLOWING:

1. 15 % x 16,29,600 = 2,44,440
2. 40,000 x 12 = 4,80,000

₹ 2,44,440 is lower, so this is the value of RFA.

Dated: 10-8-2015