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.
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 higher salary with more savings.
Because, the IT Department has made changes in the rules related to Rent-Free Accommodation , which have become effective from September 1. The Central Board of Direct Taxes has already notified amendments in 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 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 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 of AMRG & Associates, there will be a reduction in the taxable salary of employees availing HRA, which will increase the net take-home salary. On one hand this will increase savings for employees and on the other hand it will reduce government revenue.
