RENT PAID FOR AN EMPLOYEE UNDER WHICH HEAD

This query is : Resolved

Rajinder Ahuja (Querist)
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04 February 2010 RENT PAID FOR AN EMPLOYEE ( RENT FREE ACCOMODATION ) OF RS. 70000 UNDER WHICH HEAT IT WILL BE SHOWN ( SALARY A/C OR RENT FREE ACCOMODATION A.C )

M Prabhakar Menon

M Prabhakar Menon (Expert)
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04 February 2010 This is perquisite under income from Salary

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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04 February 2010 It should be booked under the head of Rent Paid (For Staff Flats) as the Employer is paying the rent as per lease agreement directly to the Landlord and the nature of expense is Rent only. However, its perks value is taxable in the hands of employee (beneficiary) as a component of salary.

Rajinder Ahuja

Rajinder Ahuja (Querist)
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04 February 2010 Thanks a lot

Rajinder Ahuja

Rajinder Ahuja (Querist)
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04 February 2010 for calulating perquisit of rent

it is 15% of salary or rent paid whichever is lower

what is the definition of salary in this case
it includes bonus and leave encashment paid during the year or not

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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04 February 2010 As per Rule 3:
Salary includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely:

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employers contribution to the provident fund account of the employee;

(c) allowances which are exempted from payment of tax;

(d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act;

(e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17;

(f) lump sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments;