The CBDT has changed the valuation of employees other than central or state government employees who live in company-owned houses. The new rules have come into effect from 1 September.
New Delhi. For Rent Free House, the Central Board of Direct Taxes (CBDT) has given great relief to the salaried people. 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 the 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 valuing rent free accommodation provided 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 in urban areas whose population is more than 40 lakh as per 2011 census, HRA will be 10 percent of the salary. Earlier it was 15 percent according to 2001 census.
Amit Maheshwari, AKM Global Tax Partner, said, “Employees who are drawing adequate salaries and living in employer-provided accommodation will now be able to save more as their taxable base is now going to be lower with the revised rates. . In such a situation, the value of their house will reduce and their 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.
