The in-hand salary of employees getting good salary and free-accommodation facility from the company may increase soon. In fact, the Income Tax Department has made some changes in the rules regarding the valuation of houses provided by its company. The benefit of this change is expected to be given to the employees who get these houses.
The in-hand salary of employees getting good salary and free-accommodation facility from the company may increase soon. In fact, the Income Tax Department has made some changes in the rules regarding the valuation of houses provided by its company. This change is expected to benefit the employees getting these houses. The Central Board of Direct Taxes (CBDT) has notified amendments to the Income Tax Rules which will come into effect from 1st September.
According to the notification, where unfurnished accommodation is provided to employees other than Central or State Government employees and such accommodation is owned by the company, its valuation will be: (i) Cities having population of 40 as per 2011 census lakhs (now it is 25 lakhs), 10 per cent of salary (now 15 per cent) 10 percent).
Amit Maheshwari, tax partner, AKM Global, said that employees who have a decent salary and have accommodation provided by the company, will be able to save more with this rule. With the revised rates, his taxable base is now going to reduce. “The valuation will be lower, which will increase their in-hand salary,” he said.
Gaurav Mohan, CEO, AMRG & Associates, said the provisions incorporate the 2011 census data and are aimed at rationalizing the calculation of perquisite tax.
“The rationalization of perquisite value will result in reduction in taxable salary of employees availing rent-free accommodation, thereby increasing their take-home pay. However, this may lead to reduction in government revenue,” he added.
