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Rent free accomodation

12 February 2010

What will be the treatment of Pay commission arrears received during the year for the purpose of calculation of 15% perks for Rent free accomodation. will it be part of the salary in view of the fact that definition of "'Salary"' states that salary will be determined on due basis.

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10 Replies

rashmi (article) (59 Points)
Replied 12 February 2010

Heyyy Pankaj........ Section 15 Basis of charge states that "Salary will be taxable on due on due or receipt basis whichever is earlier"........ No where is it stated that salary will be taxable just on due basis....Sooo ur commission arrears will be taxable as salary in the year of receipt if it has not been taxed at the time it was due....I hope this solves ur Problem...If it does plzzz help me out with mine... :)

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Chintan Shah (-) (534 Points)
Replied 12 February 2010

I think for the purpose of determining salary for the purposes rent free accomodation only the salary for the period during which the accomodation was occupied by the employee has to be considered. So arrears won't enter the computation. Please do tell me if it is wrong.....

Amir (Learner) (4016 Points)
Replied 12 February 2010

Dear Pankaj,

Friend Chintanshah is rite that for the purposes of RFA Valuation, salary is to be considered on due basis & only in respect of the period for which the House was occupied by the employee..

Therefore any arrears received will not form part of salary..

But u have mentioned about Pay commission, now this is applicable to Govt. as well as PSU's employees, therefore for PSU's emplyees the above will apply but in case of Govt. employees the valuation will be based on the Govt. rules.

CA Pankaj Bansal (Manager) (82 Points)
Replied 15 February 2010

But Amit in that case, if we take the case of PSUs, the arrears of Pay commission received during the

year will remain untaxed in the year of due i.e. p.y. 2006-07, 2007-08 & 2008-09 and in the year of receipt

i.e. p.y. 2009-10 as well.

In my opinion it should fall under, "'any monetary payment received during the year by whatever name

called" (definition of salary for RFA). please clarify.

Amir (Learner) (4016 Points)
Replied 15 February 2010

Dear Pankaj Sir,

Arrears/Advance Salary will not be included for the computation of RFA, reason is salary is to be taken on due basis onlyi:e for the period for which the House was occupied...

"Monetary Payment by whatever name called" cannot include Arrears/Advance of salary...

Plz follow this link -

https://iqchandigarh.com/UserFiles/File/amendments%20file%20on%20net%20for%20PCC%20old%20batch.pdf

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CA Pankaj Bansal (Manager) (82 Points)
Replied 15 February 2010

Amir, the said link apears to be notes of any coaching institute but is there any clarification/notification or

circular to define, ''any monetary payment by whatever name called'' bçoz its a very wider term if not

supported by any clarification.

Amir (Learner) (4016 Points)
Replied 15 February 2010

Dear Pankaj Sir,

I could not find any specific circular, notification clarifying this thing, but one thing u will find in any book is that "the salary is to be taken on due basis & only for the period for which house was occipied"

I know the link is not a concrete proof of what I am saying, I pasted it just to second my thought, in my view no need of any clarification, law itself is clear in this respect....