salary - rent free accomodation

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kamakshi bhutani

kamakshi bhutani (Querist)
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24 November 2007 amendments in rent free accomodation as a part of salary for A.Y.2007-08

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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20 February 2008 Notification No. 271/2007 [F.No. 142/15/2007-TPL], dated 7-11-2007

In exercise of the powers conferred by section 295 read with sub-section (2) of section 17 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

1. These rules may be called the Income-tax (Fourteenth Amendment) Rules, 2007.

2. In the Income-tax Rules, 1962, in rule 3,

(i) in sub-rule (1), for Table I, the following Table shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2006, namely:

Table I

Sl. No.
Circumstances Where accommodation is unfurnished
Where accommodation is furnished

(1)
(2)
(3)
(4)

(1)
Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State or serving with any body or undertaking under the control of such Government on deputation.
License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee.
The value of perquisite as determined under column (3) and increased by 10 per cent per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, 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 provided by any other employer and

(a) where the accommodation is owned by the employer, or

(b) where the accommodation is taken on lease or rent by the employer.
(i) 15 per cent of salary in cities having population exceeding 25 lakhs as per 2001 census;

(ii) 10 per cent of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census;

(iii) 7.5 per cent 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.

Actual amount of lease rental paid or payable by the employer or 15 per cent 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 (3) and increased by 10 per cent 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.

The value of perquisite as determined under column (3) and increased by 10 per cent 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)
Not applicable
24 per cent of salary paid or pay- able 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.