Perquisites are the nature of benefit or concession that employees receives from their employer in addition to the Salary. Some perquisites are taxable in the hands of employees, one of such kind is Rent Free Accommodation (RFA) provided by the employer. The value of perquisites of rent free accommodation or accommodation at concessional rate according to prescribed valuation for the employees other than Government employee is as under:

1. If the accommodation is owned by employer :
a. Where unfurnished accommodation is provided to the employees-
• 15% of salary, where the accommodation is situated in cities where population exceeds 25 lacs as per census of 2001.
• 10% of salary, where the accommodation is situated in cities having population more than 10 lacs but does not exceeds 25 lacs as per census of 2001.
• 7.5% of salary, where the accommodation is situated in other cities

b. Where furnished accommodation is provided to the employees :

• The value of perquisite shall be increased by 10% of cost of furniture and other household appliances and in case, where the furniture is hired from third party, the actual hire charges payable by the employer.

2. If the accommodation is taken on lease or rent by the employer:

• The value of perquisite shall be the lower of actual amount of lease or rental paid or payable by the employer or 15% of salary.
Note: – The above value shall be reduced from the rent, if any, actually paid by the employee.

3. Where employees is provided accommodation in a hotel:

• Where the employee is given accommodation in hotel in connection with his transfer for a period not exceeding 15 days, then the value of perquisite shall be taken as NIL.
• In other cases- the value of perquisite shall be 24% of the salary paid or payable for the previous year or the actual charges paid or payable to such hotel, whichever is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee.

For this purpose ‘Salary’ includes pay, bonus, commission on fixed percentage of turnover, dearness allowance, if term of employment so provide, other allowances, any other monetary payment.

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