If you have got a house from the company or are getting accommodation and you are not paying the rent, then there is good news for you. CBDT has provided relief in the rules related to valuation. Let’s know in points.
- CBDT has reduced the limit of Perquisite Valuation. This means that now there will be less tax deduction in the salary in exchange for the house received from the office. That means more salary will come in your hand. This rule is being implemented from the very next month i.e. September itself.
- First understand what are the rules regarding tax. In fact, many big companies provide accommodation to their employees and in return do not take rent from them. It is included in Perquisite under Income Tax rules. In Perquisite, the employee does not have to pay rent, but his tax liability is made.
- Perquisite value is fixed for tax, which is a part of the salary itself. This share can be based on the population of the place where the house is located.
- Valuation tax is added to the salary. This means that even though you are not paying the rent, it increases your income tax calculation.
- Now the limit of this part has been reduced by the CBDT. This means that in lieu of rent free house, its valuation will increase in salary but, its limit will be less than before.
- According to the notification, if the employees of the Central and State Governments as well as employees working in any other organization have got such accommodation from the company, which is owned by the company, then the valuation will be as follows.
More money will come in hands
With this decision, the people living in the houses given by the companies will get a big relief. Lowering the valuation limit will reduce the taxable income and hence the tax liability will also come down. This simply means that more money will come in the hands of the people.
