CBDT has changed the valuation of employees other than central or state government employees who live in company-owned houses. The new rules have become effective from September 1.
New Delhi. The Central Board of Direct Taxes (CBDT) has given big relief to salaried people for rent free houses. Under this, the employees who have been provided rent-free accommodation by their company, will now be able to get more salary with more savings. Because, the IT department has changed the rules related to Rent-Free Accommodation, which became effective from 1 September. The Central Board of Direct Taxes has already notified amendments to the Income Tax Rules.
According to CBDT, there has been a change in the valuation of employees other than central or state government employees who live in company-owned houses.
What’s in the new rules?
The Income Tax Department has changed the rules for evaluating rent free accommodation given by the company to its employees. According to the new rule, where employees are given unfurnished accommodation by the employer, and the ownership of such accommodation is with the company itself, its valuation will now be done differently.
Under the new rules, now the urban area whose population is more than 40 lakhs according to the 2011 census, then HRA will be 10 percent of the salary. Earlier it was 15 percent according to the 2001 census.
Amit Maheshwari, AKM Global Tax Partners, said, “Employees who are drawing adequate wages and living in employer provided accommodation will now be able to save more as their taxable base is going to reduce with the revised rates . In such a situation, the value of his house will decrease and his salary will also increase.
According to Gaurav Mohan, CEO, AMRG & Associates, the taxable salary of employees availing HRA will come down, which will increase the net take-home salary. On the one hand, this will increase the savings for the employees, on the other hand, there will be a decrease in the government revenue.
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