Rent free house salary perk will be taxed differently from today: New CBDT rules
accommodation provided by employers will be calculated. These rules will come into effect from today i.e., September 1, 2023, and will be applicable for FY 2023-24.
The new rules will impact employees living in an accommodation provided by their employer.
The rules will have an impact on the amount of tax that will be deducted from their salary.
Dipen Mittal, chartered accountant and AGM at Taxmann.com, says, “Accommodation provided by the employer (free of cost or at concessional rate) is treated as perquisite in the hands of an employee. This is considered as part of the salary and TDS will be applicable on it.
The new rules to calculate the value of accommodation provided by the employer is likely to lower the TDS and hike the take-home pay of an employee. Further, as the new rules are effective from September 1, 2023, then for the purpose of current FY 2023-24, the old rules will be applicable till August 31, 2023.”
Accommodation generally refers to house, flat, farmhouse, hotel, motel, service apartment or any other structure.
Accommodation should be provided as part of an employment benefit programme for it to be taxable as perquisites. Accommodation provided to help employees discharge official duties is not taxable.
The new rules have introduced an inflation-linked cap if the same accommodation is provided to the employee for more than one year.
What new rules say about accommodation value
The new CBDT rules for accommodation provided to an employee will use various factors such as valuation rate, population threshold of a city, furnished or unfurnished to calculate the rent of the house.
