Come September, and the new amendments to the Income Tax rules as notified by the Central Board of Direct Taxes (CBDT) will come into effect.
Employees who are living in rent-free accommodations provided to them by their employers will witness a rationalisation of perquisite value. As a result, their taxable salary will reduce, which will lead to an increase in their net take-home salary. While the decrease in the perquisite value of rent-free accommodations will mean more savings for the concerned employees, it may mean lesser revenue for the government.
Following revision of norms for valuing houses, the Income Tax Department has notified rules for valuing rent-free houses provided by employers to their employees. That means, employees earning considerable salaries and availing rent-free accommodation granted to them by their employers will be able to save more. Such employees who file ITR will now enjoy higher take-home salary.
As per the notification, the valuation of the unfurnished flat owned by the employer but given to salaried employees (other than the central or state government employees) to live in, will be as follows:
In cities with a population of more than 40 lakh as per 2011 census, it will be 10 per cent of salary. Earlier, it was 15 per cent. In cities with population of over 15 lakh but less than 40 lakh, as per 2011 census it will be 7.5 per cent of salary.
