Valuation Of Perquisite In

Respect Of
Accommodation Provided
To The Employee

MADE BY:
Drishti Sadhnani
S.Y. BBA
Division: 3
Roll No.: 171
Subject: Business Taxation

Perquisite may be defined as any casual benefit

attached to an office or position in addition to salary
or wages. In essence, these are usually non-cash
benefits given by an employer to employees in
addition to cash salary or wages. However, they may
include cases where the employer reimburses
expenses or pays for obligations incurred by the
employee. Perquisites are also referred to as fringe
benefits.

Perquisites [Section 17(2)]

ACCOMMODATION includes house, flat, farm

house or accommodation in a hotel, motel,
service apartment, guest-house, caravan, etc. for
the purpose of valuation of perquisite in respect
of accommodation.

Accommodation

Valuation of rent-free unfurnished accommodation to Govt.

employees- The value of perquisite in respect of accommodation
provided to the Central and State Government employees is
equal to the license fee, determined by the central or state Govt.
hence no any further tax is payable considering it as perquisite.
Valuation of rent-free unfurnished accommodation to non-Govt.
employees- In this category, value of the perquisite in respect of
rent free accommodation depends on salary of the employee and
lease rent of the accommodation.

Valuation Of Rent Free

Unfurnished Accommodation

Basis of valuation for private sector or other employees is as

under:-

The value of perquisite in respect of rent-free accommodation

for private sector employees depends, on salary of the
employee. Salary includes:
a)
Basic salary
b)
Dearness allowance/pay, if terms of employment so
provide
c)
Bonus
d)
Commission
e)
Fees
f)
All other taxable allowances
g)
Any monetary payment which is chargeable to tax

For this purpose salary does not include the following:a)

Dearness allowance/pay if it is not taken into account
while calculating retirement benefits, like provident fund,
gratuity etc. or if it does not form part of salary according
to terms of employment
b)
Employers contribution to provident fund account of an
employee
c)
All allowances which are exempt from tax
d)
Value of perquisites [Sec 17(2)]

Valuation of rent-free furnished accommodation:- Value of

the perquisite shall be calculated as follows:-

Meaning of furniture:- Furniture includes radio sets,

television sets, refrigerators, air-conditioners and other
household appliances.

Valuation Of Rent-Free
Furnished Accommodation

The value of perquisite shall be determined on the basis of lower of the

following two:
1)
24% of salary paid or payable in respect of period during which the
accommodation is provided.
2)
Actual charges paid or payable by the employer to such hotel.
However, nothing shall be taxable if following two conditions are satisfied:
3)
The hotel accommodation is provided for total period not exceeding in
aggregate 15 days in a previous year.
4)
Such accommodation is provided on an employees transfer from one
place to another place.
NOTE: Perquisite in respect of Residential accommodation is not taxable if it
is provided in a remote area.

Furnished Accommodation
In a Hotel

Thank You!