Central Board of Direct Taxes (CBDT) has issued Notification No.65/2023 to amend the provision of the rental accommodation as provided by the employers to its employees.
Key highlights of the amendments are tabled below:
| Sl No. | Circumstances (a) | If furnished accommodation is provided to the employees (b) | If the accommodation is unfurnished (c) |
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Where the accommodation provided is owned by the employer | The value of residential accommodation provided by the employer will be as follows: (i) 10% of salary in cities having population exceeding INR 40 lakhs as per 2011 census;(ii) 7.5 % of salary in cities having population exceeding INR 40 lakhs as per 2011 census (iii) 5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee |
The value of perquisite as determined under column (b) and increased by 10% per annum of the cost of furniture
(including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. |
| 2. | Where the accommodation is taken on lease or rent by the employer | Actual amount of lease rental paid or payable by the employer or 10% of salary, whichever is lower, as reduced by the rent, if any, actually paid by the employee. | The value of perquisite as determined under column (b) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. |
| 3. | Where the accommodation is provided by the employer specified in serial number (1) or
(2) in a hotel (except where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another). |
NA | 24% of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee |
However, exemption from above provisions is granted to the accommodation temporarily provided to the employees working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site:
(i) which, having plinth area not exceeding 1000 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or
(ii) which is located in a remote area
Wherein in case of transfer of employee from one place to another, he is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table.
Wherein the accommodation is owned by the employer and the same is continued to be provided to the same employee for more than one previous year, the amount calculated in accordance with SL. No.1 or 2 shall not exceed the amount so calculated for the first previous year, as multiplied by the amount which is a ratio of the Cost Inflation Index for the previous year for which the amount is calculated and the Cost Inflation Index for the previous year in which the accommodation was initially provided to the employee.
Source: Central Board of Direct Taxes
