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How to calculate perquisite tax on accommodation?

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3 2021-09-21T13:06:11+00:00
The Income Tax Act in India defines the rent free accommodation as perquisites granted by the employer to the employee. The income tax is applicable on rent free accommodation by employees. Perquisites are the added benefits with the job and position with the employer apart from salary component. Now that you know what is a perquisite, let us look at how to calculate perquisite tax on accommodation. Factors affecting calculation of perquisite value of rent free accommodation The following aspects are taken into consideration:
  1. Population of the city in which the accommodation is offered
  2. Ownership of the property provided to employee 
  3. Furnishing status of the house
How to calculate perquisite tax on accommodation?
Particulars Unfurnished Furnished
For Government employee Licence Fee is taxable Value of furnished house + 10% per annum cost of furniture or rent of furniture
For Private employee where accommodation is by employer in a self owned property 15% of salary for cities in which population is more than 25 lakhs 10% of salary for cities in which population is between 10 lakhs and 25 lakhs 7.5% of salary for other cities  Value determined for unfurnished property + 10% rent for furniture
For Private employee where accommodation is by employer in a rented property Actual amount rent paid by employer or 15% salary whichever is lower  Value determined for unfurnished property + 10% rent for furniture
For Private employee where accommodation is by employer in a hotel No taxes Actual charges paid to hotel or 24% of salary
This is how to calculate perquisite tax on accommodation. Learn what is perquisites in income tax Find out what is rent free accommodation here.

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