valuation of concessional/rent free accomodation
This query is : Resolved
06 October 2007
The supreme court of India in the case of Arun Kumar has ruled that since their was no deeming provision w.r.t concession in the matter of rent hence Assessing officer can be refferd to assess whether any concession is actually flowing in case of concessional accomodation
The finace Act 07 has introduced the deeming provision in section 17 of Income Tax Act 1961 as per which concession shall deemed to be provided if employee pays rent equal or less than 7.5/10/15% of salry. However in Rule 3 of Income Tax Rules, their is no amendment and thier still exist rate of 15 and 20 % for valuation purpose.
In this situation please clarify how the valuation be done i.e rates given in Section 17 or Rule 3.
The finace Act 07 has introduced the deeming provision in section 17 of Income Tax Act 1961 as per which concession shall deemed to be provided if employee pays rent equal or less than 7.5/10/15% of salry. However in Rule 3 of Income Tax Rules, their is no amendment and thier still exist rate of 15 and 20 % for valuation purpose.
In this situation please clarify how the valuation be done i.e rates given in Section 17 or Rule 3.
10 October 2007
Hi Vikram,
The provisions relating to concessional rent and the rates given in section 17 (7.5/10/15%) will only serve as a benchmark for deciding whether the concessional accomodation should be taxed as perquisite or not.
The valuation mechanism and the rates remain the same as they were before, as per rule 3. In support of this, you may observe that the situation where some amount is recovered from the employee was already covered in rule 3.
Regards
Honey Sawa
The provisions relating to concessional rent and the rates given in section 17 (7.5/10/15%) will only serve as a benchmark for deciding whether the concessional accomodation should be taxed as perquisite or not.
The valuation mechanism and the rates remain the same as they were before, as per rule 3. In support of this, you may observe that the situation where some amount is recovered from the employee was already covered in rule 3.
Regards
Honey Sawa
13 October 2007
Thanks Honey for your response.
Keeping in view the fact that their is no amendment in the Income Tax Rule 3, your reply seems to be in order.But as you may aware that any amendment required as a resul of amendment in the Finance Act, is to be done by the CBDT.It is very much likely that CBDT may be in the process of issuing amendment to Rule 3 because it is certainly illogical and not justifiable to have different benchmarks for the defination and valuation of the perquisite. Also the Rules cannot override the Act.Hence the issue needs to be reviwed from this anble also.
Keeping in view the fact that their is no amendment in the Income Tax Rule 3, your reply seems to be in order.But as you may aware that any amendment required as a resul of amendment in the Finance Act, is to be done by the CBDT.It is very much likely that CBDT may be in the process of issuing amendment to Rule 3 because it is certainly illogical and not justifiable to have different benchmarks for the defination and valuation of the perquisite. Also the Rules cannot override the Act.Hence the issue needs to be reviwed from this anble also.
27 September 2009
If this query is still pending then please post it again by updating......Good wishes.....or you can also send me a PM.
Otherwise it is already resolved.
Otherwise it is already resolved.
27 September 2009
If this query is still pending then please post it again by updating......Good wishes.....or you can also send me a PM.
Otherwise it is already resolved.
Otherwise it is already resolved.
14 August 2010
Is this query still pending? please you can send me a Pm if you still confused for this.
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