Employees having rent-free accommodation provided by their employers will now be able to save more and get a higher take-home salary as the income tax department has revised norms. The rules of rent-free accommodation given to employees by the companies have been changed.
The Central Board of Direct Taxes (CBDT) has issued a notification regarding this. After the change of rules, the employees will now be able to save more. Changes in the rules related to rent-free accommodation have come into effect as of September 1.
If an employee is living in a house provided by the company, then the calculation for that will now be done under a new formula.
A change was made to the Finance Act of 2023’s definition of “perquisite" for the purpose of valuing rent-free or inexpensive housing provided to an employee by his company. The perquisites calculation guidelines have now been announced.
In a statement released on Saturday, the income tax department noted that the categorisation and the limits of cities and population have now been based on the 2011 census as opposed to the earlier 2001 census. As per the latest notification, where unfurnished accommodation is provided to private sector employees and such accommodation is owned by the employer, the revised population limits are more than 40 lakhs (in place of 25 lakhs), between 15 lakhs and 40 lakhs (in place of 10 lakhs), and lastly, less than 15 lakhs (earlier, less than 10 lakhs).
According to reports, the earlier “perquisites" rates of 15 per cent, 10 per cent, and 7.5 per cent of the salary have now been reduced to 10 per cent, 7.5 per cent, and 5 per cent respectively in the amended rules. The rules have also been further rationalised so as to compute a fair tax implication of the same accommodation being occupied by an employee for more than one previous year.https://www.news18.com/business/cbdt-notifies-rules-for-valuing-rent-free-accommodation-perquisites-provided-by-employers-8563640.html