The Income Tax (I-T) department has made things easier for employees availing accommodations provided by employers. According to the latest changes, individuals using rent-free accommodation provided by their employers will now have the opportunity to increase their savings and take home a much bigger portion of their income.
The Central Board of Direct Taxes (CBDT) has approved and notified the amendments in the income tax rules and these will be implemented from September 1 this year.
On the basis of the notification, any unfurnished accommodation provided to employees, other than those employed by the central or state government, which is owned by the employer will be valued under two categories. These categories will value the accommodation at either 10 per cent of salary in cities with a population exceeding 40 lakh as per the 2011 census or 7.5 per cent of salary in cities with a population above 15 lakh but under 40 lakh on the basis of the 2011 census.
Earlier, these categories valued employer-provided accommodation at 15 per cent in cities with 25 lakh population, on the basis of the 2001 census, or 10 per cent in cities with population between 10-25 lakhs as per the 2001 census.