Valuation of Accommodation provided to an Employee in a Hotel

Taxable perquisites include the value of rent free accommodation or accommodation at concessional rent provided to an assessee by his employer. Very often the employee (whether Government or non-Government) is provided accommodation in a hotel. For the purpose of income tax hotel accommodation provided to an employee in a hotel will be valued as under:

  • Where hotel accommodation is provided for not more than fifteen days and such accommodation is provided on an employee’s transfer from one place to another the value of such perquisite will be taken as nil.
  • In all the other cases the value of hotel accommodation will be 24% of salary or actual charges whichever is lower as reduced by the rent if any actually paid or payable by the employee.

For this purpose salary means basic salary + dearness allowance forming part of retirement benefits + taxable allowances + bonus + commission + any monetary payment paid by the employer but does not include employer’s contribution to Provident Fund and value of any perquisites. Salary is to be calculated on due basis and whether received from that employer or other employer.

However, it may be noted that if hotel accommodation is provided in a remote area to an employee working at a mining site or an on shore oil exploration site or a project execution site or an accommodation provided in an offshore site of similar nature, the perquisite value shall be nil. Remote area means an area that is located at least 40kms away from a town having a population not exceeding 20,000 based on latest published all India census.

Tax Returns for Financial Year 2010 -11 (March 2011) has started.  Just mail us Form16/ Salary Certificate and details of other income, at . We would take it from there to file your return of income. provides complete online taxation solutions for individuals ( Tax Returns + Tax Support + Tax Planning ) – please see this – Services Offered. Providing Complete Online Tax Solutions for Individuals, Not Just Returns .

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