CBDT notifies Rule for determination of value of perquisite in respect of residential accommodation provided by employer
- The Finance Act, 2023 brought in an amendment for the purposes of calculation of “perquisite” with regard to the value of rent-free or concessional accommodation provided to an employee, by his employer.
- Accordingly, CBDT has modified Rule 3 of the Income-tax Rules, 1961 to provide for the same, effective from 1 September 2023.
- The categorisation and the limits of cities and population have now been based on the 2011 census as against the 2001 census earlier. The revised limits of population are 40 lakh in place of 25 lakh and 15 lakh in place of 10 lakh.
- The earlier perquisite rates of 15%, 10% and 7.5% of the salary have now been reduced to 10%, 7.5% and 5% of the salary respectively.
- In case the accommodation is continued to be provided to the same employee for more than one previous year, the amount calculated shall not exceed the amount so calculated for the first previous year, as multiplied by the ratio of the Cost Inflation Index (CII) for the previous year for which the amount is calculated and the CII for the previous year in which the accommodation was initially provided to the employee.
(Notification No. 65/2023 dated August 18, 2023)