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Mr. Sharma gets salary of Rs.40,000 p.m. and is provided with rent free unfurnished accommodation at

Aastha (STUDENT) (12 Points)

21 March 2021

Mr. Sharma gets salary of Rs.40,000 p.m. and is provided with rent free unfurnished accommodation at Ludhiana ( population 20 lakhs) whose fair rental value is Rs.15,000 p.m. He gets leave encashment for the current previous year of RS.20, 000 during the year. His salary is due on 1st day of every month. Calculate the value of rent free accommodation and gross salary

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2 Replies

Naveen (student) (334 Points)
Replied 21 March 2021

Hii Aastha. It depends on whether that accomodation is owned by Employer or Hired by Employer. And try to give details like Basic Salary, Dearness Allowance, Bonus if any, Allowances etc..

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CA. Sourav Sarkar (Chartered Accountant ) (24588 Points)
Replied 21 March 2021

If the accomodation is owned by employer then value of rent free accommodation will be

Rent paid
Less: 10% of salary (as population is 20 lakhs)

Or if accomodation is taken on lease by employer then value of rent free accommodation will be

Rent paid by employer
15% of salary
whichever is lower