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Taxation Central Ministry of Finance Income Tax Act, 1961

CBDT notifies Rule for determination of value of perquisite in respect of residential accommodation provided by employer

19-Aug-2023 | Press Release

Central Board of Direct Taxes (CBDT) has issued a Press release notifying a new rule for the determination of the value of perquisite in respect of residential accommodation provided by an employer. The new rule comes in light of the amendments introduced by the Finance Act, 2023, which aimed to modify the calculation of perquisite concerning rent-free or concessional accommodation provided to employees by their employers. Rule 3 of the Income-tax Rules, 1961 has been modified by the CBDT to accommodate these changes.

The key points of the amendment include:

1. Categorization based on Census Data: The categorization of cities and population limits has been updated based on the 2011 census data, replacing the earlier 2001 census data.

2. Revised Perquisite Rates: The perquisite rates have been revised as follows:
a. For cities with a population of more than 40 lakh, the perquisite rate is 10%.
b. For cities with a population between 15 lakh and 40 lakhs, the perquisite rate is 7.5%.
c. For cities with a population less than 15 lakh, the perquisite rate is 5%.
d. Fair Tax Implication for Long-term Occupancy: The rule has also been rationalized to ensure a fair tax implication when an employee occupies the same accommodation for more than one previous year.

Please note that Notification No. 65/2023 dated August 18, 2023, containing these amendments, has been published and is accessible through the official government gazette website at https://egazette.nic.in.

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