Valuation of Residential Accommodation

[Rule 3(1)]
Employer provides accommdation to the
employee free of cost,such accommodation is
known as Rent Free Accommodation.

•In the case of Government employees:

It includes employees of central and state
government (except employees of local
authority, statutory corporation, employees of
government on deputation )
Unfurnished accommodation-
License fee fixed by the government.
Fair market value is not considered.

Furnished accommodation-
value of unfurnished accommodation
(+) 10% p.a. of cost of furniture or hire charge
(-) amount paid or payable by employees
•In the case of other employees:
If accommodation is owned by employer:

Unfurnished accommodation (as per 2001

census):

a) If population less than 10 lakhs – 7.5% of

salary.
b) If population is greater than 10 lakhs but
less than 25 lakhs – 10% of salary
c) If population is greater than 25 lakhs- 15%
of salary
Furnished accommodation:

Value of furnished house

(+) 10% p.a. of cost of furniture or hire charges
if any
Note:- Meaning of salary for rent free
accommodation

It includes basic pay, allowances, bonus,

commission, payable monthly or otherwise or
any monetary payment, by whatever name
called from one or more employers.

'Salary’ Does Not Include the following​:

1.Dearness allowance if not paid as per terms of
employment or if it does not enter into salary for
computation of all retirement.
2.Any other allowance which is a exempt one.

3.Employer’s contribution in employee’s

provident fund.

4.Value of other perquisites falling u/s 17(2).

5.Lumpsum payments received at the time of

termination of service or superannuation or
voluntary retirement .

6.The amount paid or reimbursed for treatment

Submitted by,
SINI MOL BABY
3rd DC Bcom
Taxation
Class No:537