Perquisites Valuations & Exemptions Income Tax India

Perquisites Valuation: Introduction

As per section 17(2) Perquisite includes

• Value of Rent-free accommodation provided by employer
• Value of any concession in the matter of Rent
• Any obligation payable by the employee, which is being met by the employer to Fringe Benefit Tax
• The value of any fringe benefit or amenity, which is not chargeable in the hands of Employer
• Any sum payable by the employer to effect an assurance on the life of the assessee or to effect a contract for annuity
• Value of any benefit or amenity granted or provided free of cost or at concessional rate to specified employees.

Perquisite Valuation for Accommodation
Provided Free of Rent

Rent Free Unfurnished Accommodation

Taxable value of rent-free unfurnished accommodation provided by the employer during the previous year (i.e., from Apr 1, 2007 to Mar 31, 2008) to the employee.

a. Where Government provides the Rent Free Unfurnished accommodation to a person holding an office or post in connection with the affairs of the Union or State or serving with any body or undertaking under the control of such Government on deputation.

Perquisite Value:

Licence fee determined by Union or State Government in respect of accommodation in accordance with the rules framed by that Government.

b. Where any other employer provides Rent Free Unfurnished accommodation.

Perquisite Value: -

Where accommodation is owned by employer: -

1. 15% of the salary, in cities having population more than 25 lakhs as per 2001 census
2. 10% of the salary, in cities having population more than 10 lakhs but not more than 25 lakhs as per 2001 census
3. 7.5% of the salary, in any other place.

Where accommodation is taken on lease or rent by the employer: -

1. Actual amount of lease rental paid or payable by the employer
2. 20% of salary

Rent Free Furnished Accommodation

The taxable value of Rent-Free Furnished Accommodation (Except Hotel Accommodation) provided by the employer during the previous year to the employee is determined in the following manner: -

How to calculate the 'Value of Furniture & House-hold Equipments'?

Value of Furniture & House-hold Equipments is calculated as below: -

Hotel Accommodation

Where the employer provides the accommodation in a Hotel (except where such accommodation is provided for a period not exceeding in aggregate 15 days on his transfer from one place to another).

Perquisite value for Furnished Hotel Accommodation is taxable to the extent of least of the following: -

1. 24% of the Salary paid or payable for the period of stay as a proportion to the salary paid or payable for the previous year
2. Actual Charges paid or payable to such hotel

Go to Top

Perquisite Valuation for Accommodation Provided At Concessional Rent

The taxable value of Concession in Rent of Accommodation provided by the employer during the previous year to the employee is determined in the following manner: -

Go to Top

Perquisites Not Chargeable to Income tax

The following perquisites in respect of rent free accommodation or concession in rent of accommodation are not chargeable to perquisite with effect from 01.04.2001: -

1. Accommodation located in a `remote area' provided to an employee working at

   • A Mining Site or

   • an onshore oil exploration site or

   • a project execution site or

   • an accommodation provided in an offshore site of similar nature.

2. Where on account of his transfer from one place to another,

   1. the employee is provided with accommodation at the new place of posting

   2. and if the employee is retaining the accommodation at the other place,

   then the perquisite value in respect of accommodation having lower value shall be chargeable for a period not exceeding 90 days.

   Perquisite value exceeding 90 days shall be chargeable in respect of both the accommodations.

Go to Top

Terms & Explantions

Accommodation includes

• A House

• Flat

• Farm-House or part thereof

• or accommodation in a hotel, motel, service apartment,

• Guesthouse

• Caravan

• Mobile home

• Ship or

• Other floating machine

Hotel includes licensed accommodation in the nature of,

• Motel

• Guesthouse

• Service apartment

Remote Area means an area located at least 40 kilometres away from a town having a population not exceeding 20,000 based on latest published all-India census.

Salary for the purpose of Computation of Rent-Free/Concession in Accommodation

Salary includes

• the Pay

• Allowances

• Bonus or Commission Payable

• or any other Monetary Payment

Salary does not include the following

• Dearness Allowance or Pay unless it enters the retirement benefits

• Employer's contribution to Provident Fund Account

• Allowances, which are exempt from income tax

• Value of Perquisites specified in section 17(2) and Perquisite specifically excluded by proviso to section 17(2)(iii).

Go to Top

Explore www.v-krishnan-and-company.com

Net Salary | Salary Exemptions | Salary Allowances | Income Tax Liability | Income Tax Rates | Chapter VI-A Deductions | IT Return Due Dates | AY 2008-09 Return Forms

Return to Indian Income Tax Page.

Return from Perquisites Valuation Page to V.Krishnan & Co. Home Page