Amount paid as rent

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 February 2017 I am bank employee with leased accommodation provided by Bank. Monthly rent is 27000, out of which bank pays 23000 as per my entitlement and balance 4000 recovers from my account. Am I eligible to deduct the same frm my income?

Expert : Anonymous

Expert : Anonymous (Expert)

12 February 2017 you are paying 4000 to whom? bank or owner ?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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14 July 2024 As a bank employee with leased accommodation where the bank pays a portion of the rent directly and recovers the balance from your salary, the tax treatment depends on whether the leased accommodation is considered a perquisite or not. Here’s how it typically works:

### Tax Treatment of Leased Accommodation:

1. **Perquisite Calculation**:
- If the leased accommodation is considered a perquisite (a benefit provided by the employer), the value of the perquisite is calculated based on certain rules provided under the Income Tax Act, 1961.

2. **Perquisite Value**:
- The perquisite value for leased accommodation is generally calculated as the actual rent paid or payable by the employer minus any rent recovered from the employee. If the employer directly pays a part of the rent and recovers the balance from your salary, the net amount (after deducting what you pay) is considered for taxation.

3. **Tax Deduction Eligibility**:
- You can claim deduction under Section 10(13A) of the Income Tax Act, which provides for the exemption of house rent allowance (HRA) received from the employer to the extent it is actually paid and subject to certain conditions. However, this section typically applies to cases where HRA is received as part of salary and not directly related to leased accommodation provided by the employer.

4. **Claiming Deduction**:
- Since the accommodation is provided by the bank and a portion of the rent is recovered from you, the amount recovered (4000/- in your case) would generally be considered as reducing the taxable value of the perquisite.

### Steps to Determine Taxability:

- **Check with Employer**: Confirm with your employer (the bank) how they treat the leased accommodation in terms of taxation. They should provide details on how the rent is calculated as perquisite and whether any deductions apply.

- **Tax Computation**: The taxable value of the perquisite (leased accommodation) will be included in your salary income and taxed accordingly. The amount recovered (4000/-) would be deducted from the total rent paid by the bank to arrive at the taxable value.

- **Tax Planning**: To ensure correct tax treatment, consult with a tax advisor or accountant who can review your specific situation and provide guidance on any additional deductions or exemptions applicable.

### Conclusion:

While the amount you pay (4000/-) is recovered from your salary, the exact tax implications depend on how the leased accommodation is treated as perquisite by your employer. Generally, the recovered amount reduces the taxable value of the perquisite, but it's important to verify with your employer and seek professional advice to ensure compliance with tax regulations.

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