Query related to rent free unfurnished accommodation

This query is : Open

Rahul Shelke (Querist)
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20 December 2010 Respected Experts,

Could you please advice me on below mentioned query:
- If a employee rent out his owned house to the comapny and the same will be given back by company to him as a perquisite [Rent free unfurnished accommodation]. Can he claim the exemption for rent free unfurnished accommodation.

Thank you.

- Rahul

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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20 December 2010 Actually RFA Perquisite Available Some Restriction That U Doesn't Own Any House.

Rahul Shelke

Rahul Shelke (Querist)
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20 December 2010 Hello Ayush,

Thank for the reply.

I am sorry, but your answer is not clear.

I have also read the relevant section from the ICAI's study material [CA IPCC] but it's not mentioned any where that if a employee owned a house then he can not claim the exemption for rent free unfurnished accommodation. Though institute has clearly mentioned that if an employee owned a house he will disqualify for claiming the exemption u/s 10((13A)of the Income Tax Act.

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CA. R. B. SAH

CA. R. B. SAH (Expert)
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20 December 2010 Exemption under section 10(13A) Shall not be allowed if assessee does not pay rent or owns house.
Rent Free Accomodation is taxable in hands of assessee. In the case of RFA, exemption Under section 10(13A) CAN NOT CLAIMED.

Rahul Shelke

Rahul Shelke (Querist)
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21 December 2010 Hello Sir,

I think I am not clear on my query. Let me explain the case with the help of one example for better clarity:
X is the Managing Director of the ABC Pvt. Ltd. based in Bangalore. X owns a house in the same city. In the mid of the year X has entered into a leave and license agreement with ABC Pvt. Ltd. for letting out of his own house for Rent of Rs. 50K per month. The company in turn included the perquisite of Rent free unfurnished accommodation for Rs. 60K per month in his pay structure.

Tax treatment from Companies view point:
TDS will be deducted @ 10% on the monthly rent payment made to X
TDS on X remuneration will be calculated after taking in to account the tax exemption of rent free unfurnished accommodation.

Tax treatment from X's view point:
Include rent received from ABC Pvt. Ltd. Under the head 'Income from House Property'
Pay the advance tax if annual estimated tax liability after taking into account TDS deducted by ABC Pvt. Ltd.

Q1 - Can the employee claim the exemption for rent free unfurnished accommodation.

Q2 – This is the only house owned by X. He is using 1st floor and ground floor is given on rent to ABC Pvt Ltd. In this case can we say that the house is a let out property and calculate the taxable accordingly and get the full benefit of interest paid on housing loan at actual [which is >1.50 Lakh].

Thank you.
- Rahul

Rahul Shelke

Rahul Shelke (Querist)
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21 December 2010 Dear Experts,

Could you please advice on my query raised related unfurnished accommodation.

Please reply at the earliest.

Thank you.
- Rahul