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Whether accomdation provided by company is treated as perqui (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
10 February 2012

Sir,
Our company has provided quaters to the empolyees and their HRA is deducted. This is neither rent free accomodation nor any concessional accomodation. Whether this accomodation is treated as perquisite. If yes unedr which section & under which supreme court decision.

CA Suraj Lakhotia

( Expert )
11 February 2012

As per section 17(2),

"Perquisite" includes -
(i) The value of rent-free accommodation provided to the assessee by his employer;

It needs to be seen whether Rent is deducted or HRA is not paid. If HRA is not paid at all, then it becomes a rent free accomodation and is treated as a perquisite accordingly.

CA PARAS BAFNA

( Expert )
12 February 2012

I agree with Mr. Lakhotia.

However other view may also be considered..
.
If the amount of HRA is deducted from the salary it means the same amount has been paid towards Rent. HRA is exempt on minimum amount from the following criteria-
1. 40%/ 50% of Salary
2. Rent Paid-10% of Salary
3. Actual Amount of HRA Received.
Leaving the First Criteria aside, assume that Rent Paid is equal to HRA, then also 10% of salary comes out as to be taxable.
.
In the given situation, It is better to treat the house as Concessional accommodation so that the deduction of amount (HRA) can be considered as Rent Recovered from the employee.
.