RENT FREE ACCOMODATION - URGENT

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2010 One of our client has allotted rent free accomodation owned by employer to more than one employees on sharing basis. since, said employees are unmarried, they occupied single accomodation jointly. question here is whether do we add perks to all of the employees or not. kindly suuggest remedy for this situation with propoer citation.

sanjeev

sanjeev (Expert)
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11 January 2010 Dear,

On the basis of rent actually shared and with the sharing area of Rent Free Accomodation it would be made taxable in case of all employees as perquisite as per Section 17

Best
Sanjeev

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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11 January 2010 Perks should be add to all the employees based on the proportion

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Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2010 Thank You Mr. Sanjeev and Mr. Ramesh,

criticality here is accomodation is owned by employer. accomodation is located in city having population of less than 10 lakhs. hence we have to apply 7.5% on thier salary to calculate perks.
They are drawing salaries with different slabs. whose salary should be taken as basis. kindly suggest on what proportion do we add perks. kindly suggest me in this regard.

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2010 If One employee draws Rs. 75,000/- p.m. and another employee draws Rs. 50,000/- p.m. and both of them were allocated same accomodation, what could be value of perk if the accomodation is is owned by employer. accomodation is located in city having population of less than 10 lakhs.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)
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13 January 2010 See i think that should be calculated according to their salary and after that you can proportionate their taxable part.

e.g.,
A Employee = 75,000 * 7.5% = 5625
B Employee = 50,000 * 7.5% = 3750

Therefore, Taxability:
A = 5625 * 50%(Say occupied portion) = 2812.5
B = 3750 * 50% = 1875

Regards!!!