Income Tax New Rule: What will be the impact on the employees due to reduction in the taxable value of rent-free accommodation by the Income Tax Department?
The benefit will be that these employees will have to spend less on rent on the house, due to which they can save more money in their salary. Can save, this will increase their salary. If you work for a company and live in rent-free houses provided by the company, then there is a big news for such people. Actually, such people have got big relief from the Income Tax Department.
The department has changed the rules for evaluating rent-free accommodation. The Income Tax Department has reduced the tax for employees living in company accommodation. Central and state government employees will benefit from this, because they are provided accommodation. The new rule has come into effect from today, September 1, 2023.
Income tax rules on rent-free house provided by company
In cities with population more than 40 lakh as per 2011 census, the salary is 10 per cent, while in cities with population more than 15 lakh but not more than 40 lakh as per 2011 census, it is 7.5 per cent of the salary . The value of rent-free provided by an employer to an employee is taxable as perquisite.
What effect will this new rule have on employees?
The question arises that what will be the impact on the employees due to reduction in the taxable value of rent-free accommodation by the Income Tax Department, then it will benefit them that these employees will have to spend less rent on the house, due to which they can save more money in their salary. Can, this will increase their salary.
As such, employees who live in employer-owned/rented accommodation may see a decline in the rent-free , taxable perquisite value, thereby reducing the tax burden. Archit Gupta, founder and CEO of Clear, said that will be able to bring a little more money into their hands.
These taxpayers will benefit from this rule change
According to the CBDT notification, the changes are expected to particularly benefit high-income individuals who receive employer-provided housing allowances.
Will you benefit?
The tax and investment expert said the employer would have to look at the calculation of the perquisite in relation to the value of the rent-free. He further said that its direct impact will be visible on the salaries of the employees. ‘ With lower taxes, the salary in hand will be higher.
The Central Board of Direct Taxes (CBDT) has notified amendments to the income tax rules for assessment of perks of rent-free or concessional accommodation to employees by employers. The Finance Act 2023 had brought an amendment for the purposes of computing ‘ perquisite ‘ in respect of the value of rent-free or concessional accommodation provided to an employee by his employer.
