CBDT introduces new rule for calculating perquisites on employer-provided housing.
CBDT introduces new rule for calculating perquisites on employer-provided housing
The Finance Act 2023 brings changes in valuing rent-free or concessional accommodations for employees. Rule 3 of Income-tax Rules, 1961 has been amended. Let’s dive into the updates:
City Limits Revised: The categorization of cities and population limits now align with the 2011 census data, replacing the 2001 census. Population limits are adjusted to 40 lakh (earlier 25 lakh) and 15 lakh (earlier 10 lakh).
Revised Perquisite Rates: Previous rates of 15%, 10%, and 7.5% of salary have been modified to 10%, 7.5%, and 5% respectively. For instance, in cities with a population between 15 to 40 lakh, the new perquisite rate is 7.5%.
Long-term Occupation Considered: The new rule takes into account the tax implications when an employee occupies the same accommodation for multiple years. This ensures a fair assessment over time.