New tax norms favour employees living in employer accommodation

Reduction in salary percentage considered as perquisite value and introduction of inflation-linked cap will reduce taxable income

The Central Board of Direct Taxes (CBDT), in a recent notification, modified Rule 3 of the Income-Tax (I-T) Rules, 1961, which deals with rent-free accommodation offered by employers to employees. These changes follow the amendment to the Finance Act, 2023, for calculating perquisites related to concessional housing. A perquisite is an emolument or benefit attached to an office or position paid in addition to salary or wages. These new norms will come into effect from September 1, 2023.
 

Employees who benefit from rent-free accommodation should pay heed to these new regulations, especially if they are in the higher salary brackets.