Tax Relief: 7.5 percent (less than 10 percent) of salary in cities with a population of more than 15 lakhs but less than 40 lakhs as per 2011 census. Earlier it was more than 10 lakh but not more than 25 lakh as per 2001 census.
Rent Free Accommodation: If you are also employed, then you have been given a big relief by the Income Tax Department. The Income Tax Department has made a big announcement for the salaried class. Yes, the Income Tax Department has changed the rules related to Rent-Free Accommodation. Income tax has changed the rule of valuation of Rent-Free Home given by the company to the employees. With this, the employees getting better salary and living in rent-free home provided by the employer company will now be able to save more and they will be able to take more cash as salary.
Valuation will be as per 2011 census
The Central Board of Direct Taxes (CBDT) has changed the rules related to income tax. The new rule will come into effect from 1 September. According to the notification, if only accommodation (unfurnished) is provided to employees other than central or state government employees and such accommodation is owned by the employer, then valuation will be- In cities with population of more than 40 lakhs as per 2011 census 10 percent of salary (less than 15 percent). Earlier this rule was for population more than 25 lakh as per 2001 census.
Employees will be able to save more after the new rule
7.5 per cent (less than 10 per cent) of salary in cities with a population of more than 1.5 million but less than 4 million as per the 2011 census. Earlier it was more than 10 lakh but not more than 25 lakh as per 2001 census. AKM Global Tax Partner Amit Maheshwari said that employees who are getting adequate salary and accommodation from the employer will be able to save more as their taxable base is going to reduce now with the revised rates.
AMRG & Associates CEO Gaurav Mohan said that the 2011 census figures have been included in these provisions. Its purpose is to rationalize the perquisite value calculation. “The taxable salary of workers availing rent-free accommodation will come down, thereby increasing the net take-home pay,” Mohan said.
