Income tax treatment on perquisites such as accommodation, c

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This query is : Resolved

Mrs Sharma (Querist)

01 May 2012 Hello All,
I am unable to get the right guidance and It would be great if talented CA's here could give me their feedback.

I have recently been appointed as a director in my family concern. I have a gross salary of Rs 75000. I have an option of shifting into the company guest house and use comapany car and driver. If i avail this option what will be the tax treatment of these perquisites? And how does this compare to HRA allowance in Mumbai.

Please let me know your inputs.
many Thanks,

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

01 May 2012 If the employer provided the accommodation owned by him
15% of 'salary' in cities having population exceeding 25 lakh as per the 2001 census.
The rate is 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 Census.
For other places, the perquisite value would be 7.5 % of the salary.
Where the accommodation so provided is taken on lease/ rent by the employer, the prescribed rate is 15% of the salary or the actual amount of lease rental payable by the employer, whichever is lower, as reduced by any amount of rent paid by the employee.
For furnished accommodation, the value of perquisite as determined by the above method shall be increased by-
i) 10% of the cost of furniture, appliances and equipments, or
ii) where the furniture, appliances and equipments have been taken on hire, by the amount of actual hire charges payable.
- as reduced by any charges paid by the employee himself

For Car & driver- if the usage is offical then no taxes, if the usage is both offical & personal then the exemption is as follows

Taxable value of the expenses in the hands of employee is
if car hp 16 Rs. 2400 p.m. with 900p.m. chauffeur salary.

HRA exemption is normal calculations as

1. Actual HRA
2.Rent paid less 10% salary
3. 50% of basic (for metro)

least of the above is exempted balance HRA is taxable

when staying rent free house, cannot claim HRA exemption

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