Rent free accomodation by employer

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Maneesh (Querist)
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07 January 2012 Hi,

A company provides rent free accomodation to employee. Employee has to bear the 7.5% of taxable salary as taxable perquisits. That rent free accomodation is in place of HRA. Eiter employee get HRA or get accomodation.

What can be mechanism to save the tax on 7.5% which is not at all received in cash.

Possible solution 1)company provide accomodation on rent to employee (Leasing arrangement) 2) Company form a trust and transfer that colony in trust and trust provide the accomodation. Pls advise the feasibility of these solutions. If you have any other possible solution to save tax than pls suggest. Pls revert asap.

Regards,
Maneesh Jain
9530255684

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 January 2012 As your option both the cases also taxable.

Option.1.When employer providing house on rent, then we need to value the rent free accomodation perks and deduct the rent received from employee ex. Rent free accomodation or concessional rent value Rs.100 and rent paid by employee to company Rs.40 means balance Rs.60 is taxable

Option.2 When company forming colony and transfer under trust and giving rent means then the actual rent free accomodation calculation need to be workout for taxable perks

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