Rent free accomdation(rfa) and tax liability
This query is : Resolved
19 April 2014
We as Pvt company recruited a consultant and among others perks, provided a RFA worth of 30k.
Company is directly paying 27k rent to land lord after deducting TDS @10% on 30k.
Now company is supposed to deduct the TDS in the hands of consultant also uner 194J . Perquisite value of RFS is Rs 2.4 lacs (1.e 15% of salary or RFA whichever is less) Regards.
Should company deduct TDS @ 10% on above perk ??
Company is directly paying 27k rent to land lord after deducting TDS @10% on 30k.
Now company is supposed to deduct the TDS in the hands of consultant also uner 194J . Perquisite value of RFS is Rs 2.4 lacs (1.e 15% of salary or RFA whichever is less) Regards.
Should company deduct TDS @ 10% on above perk ??
19 April 2014
Its a perk and is taxable as salary u need to deduct tax under section 192.
Perquisite is a part of salary income.
Perquisite is a part of salary income.
Message likes :
1 times
21 April 2014
Thanks Manoj.
Now is it mean Consultant is to be taxed u/s 192 on RFA( as salary income) and his other remuneration( Approx 60 K towards consultancy fees) taxed under 194 J?
Since in above case of RFA is employee eligible for basis exemption of 2 lacs??
Regards
Now is it mean Consultant is to be taxed u/s 192 on RFA( as salary income) and his other remuneration( Approx 60 K towards consultancy fees) taxed under 194 J?
Since in above case of RFA is employee eligible for basis exemption of 2 lacs??
Regards
21 July 2025
Great question! Let me clarify the tax implications of Rent Free Accommodation (RFA) given as a perk to a consultant in India:
Key facts you shared:
Consultant receives RFA worth Rs 30,000 per month.
Company pays Rs 27,000 rent directly to landlord (after deducting TDS @ 10% on Rs 30,000).
Perquisite value of RFA is Rs 2.4 lakhs (calculated as 15% of salary or RFA whichever is less).
Query: Should company deduct TDS @10% on the perquisite (RFA)?
Tax Treatment & TDS Deduction:
Is RFA taxable as salary or professional fees?
Since the consultant is a Pvt company’s consultant, not a salaried employee, the treatment depends on the nature of engagement.
However, if the consultant is treated as an employee (permanent or contractual), then perquisite is part of salary income and tax is deducted under Section 192 (TDS on salary).
If the consultant is a professional (independent), then fees paid is taxable as professional fees and tax is deducted under Section 194J (TDS on professional fees).
Usually, if RFA is given as a perquisite for employment, it is part of salary income.
In your case:
If consultant is considered an employee, company should deduct TDS on RFA perquisite under Section 192.
If consultant is an independent professional, professional fees (60k) are subject to TDS under Section 194J but RFA perquisite may not be part of professional fees.
As you mentioned, company is already deducting TDS @10% on Rs 30,000 rent (under 194J?), but that may not be fully correct if RFA is a perquisite.
Exemption for salary income (Section 192):
Consultant’s salary income (including perquisites like RFA) is taxable.
The basic exemption limit (e.g. Rs 2 lakhs for individual) applies to total income, including salary and other income.
If the consultant is treated as an employee, the total salary including RFA perquisite is considered.
If the consultant is not an employee but an independent consultant, then exemption is on total income, but salary rules (including 192) do not apply.
Key facts you shared:
Consultant receives RFA worth Rs 30,000 per month.
Company pays Rs 27,000 rent directly to landlord (after deducting TDS @ 10% on Rs 30,000).
Perquisite value of RFA is Rs 2.4 lakhs (calculated as 15% of salary or RFA whichever is less).
Query: Should company deduct TDS @10% on the perquisite (RFA)?
Tax Treatment & TDS Deduction:
Is RFA taxable as salary or professional fees?
Since the consultant is a Pvt company’s consultant, not a salaried employee, the treatment depends on the nature of engagement.
However, if the consultant is treated as an employee (permanent or contractual), then perquisite is part of salary income and tax is deducted under Section 192 (TDS on salary).
If the consultant is a professional (independent), then fees paid is taxable as professional fees and tax is deducted under Section 194J (TDS on professional fees).
Usually, if RFA is given as a perquisite for employment, it is part of salary income.
In your case:
If consultant is considered an employee, company should deduct TDS on RFA perquisite under Section 192.
If consultant is an independent professional, professional fees (60k) are subject to TDS under Section 194J but RFA perquisite may not be part of professional fees.
As you mentioned, company is already deducting TDS @10% on Rs 30,000 rent (under 194J?), but that may not be fully correct if RFA is a perquisite.
Exemption for salary income (Section 192):
Consultant’s salary income (including perquisites like RFA) is taxable.
The basic exemption limit (e.g. Rs 2 lakhs for individual) applies to total income, including salary and other income.
If the consultant is treated as an employee, the total salary including RFA perquisite is considered.
If the consultant is not an employee but an independent consultant, then exemption is on total income, but salary rules (including 192) do not apply.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- LTCG EXEMPTION AND TAX APPLICABILITY
- ITR 3 VALIDATION
- EPF withdrawal before 5 years and Disclosure in ITR-2
- Brokage income from sale and purchase of property
- Error while validating
- ITR-4- U/s.44AD- Financial Particulars of Business
- Clarification on ITR 3: Is Sl. No. 64 required for 44ADA income?
- 44AD business and F&O loss
- Regarding Withdrawal of unused amount in Capital Gain account scheme
- UNUTILISED CAPITAL GAIN FD
- RCM on repair and maintenance
- Accounting entry for instalment payments and gst obigations
- Purchase of Time Deposit in AIS
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Stamp Duty & Registration Fees on Sale Deed
- GST on Restaurant service
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
- Filing GST Returns after death of proprietor
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
