The Finance Act 2009 had abolished Fringe Benefit Tax (FBT) with effect from 1 April 2009. As a consequence, it had restored the taxation of perquisites provided by the employer, in the hands of the employee. The much awaited new rules have now been notified by The Central Board of Direct Taxes (CBDT) vide Notification dated 18 December 2009. The amended provisions will be retrospectively effective from 1 April 2009 onwards.
The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) have in respect of accommodation provided by employer including in respect of accommodation in hotels is tabulated as under:
| Nature of benefit provided by the employer |
Value of perquisite as per erstwhile rules |
Value of perquisite as per new rules |
Where unfurnished accommodation is provided by Central/State Government:State Government:
|
||
| (a) Employees either holding office or post in connection with the affairs of the Union! StateRule 3(1)(1) | License fee determined by the Central! State Government in accordance with the rules framedas reduced by the rent, if any, paid by the employee.
* Refer Note 1 |
Same as erstwhile provisions |
| (b) Employee who is serving on deputation with any body or undertaking under the control of Central!State GovernmentExplanation to Rule 3(1) | – Same as above – | -15% of salary in cities where population is more than 25 lakhs-10% of salary in cities where population is more than 10 lakhs but does not exceed 25 lakhs
– 7.5% in cities in other areas as reduced by the rent, if any, paid by the employee. Refer Notes 1 and 2 |
Note 1: In case of furnished accommodation, the perquisite value will be increased by 10% of the cost of furniture/actual hire charges, as reduced by the amount actually paid by the employee.
Note 2: ‘Salary’ would primarily include basic salary and taxable allowances, bonus etc, but has been amended to specifically exclude any lump sum payments received at the time if termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments.
| Nature of benefit provided by the employer |
Value of perquisite as per erstwhile rules |
Value of perquisite as per new rules |
| Where unfurnished accommodation is provided by employer other than Central/State Government | ||
| (a) Accommodation is owned by the employerRule 3(1)(2)(a) | -15% of salary in cities where population is more than 25 lakhs-10% of salary in cities where population is more than 10 lakhs but does not exceed 25 lakhs
– 7.5% in cities in other areas as reduced by the rent, if any, paid by the employee. * Refer Notes 1 and 2 |
Same as erstwhile provisions |
| (b) Accommodation is taken on lease or rent by the employerRule 3(1)(2)(b) | Lower of:-actual amount of lease rent payable by the employer; |
|
or
-15% of salary;
as reduced by the rent, if any, paid by the employee.
* Refer Notes 1 and 2Same as erstwhile provisionsAccommodation is provided by the employer in a hotel (Hotel’ includes licensed accommodation such as motel, service apartment or guest house) (a) Accommodation is provided for a period of upto 15 days in the aggregate on account of transfer of employee from one place to anotherRule 3(1)(3)Not taxableSame as erstwhile provisions(b) Accommodation is provided for a period of more than 15 days in the aggregate on account of transfer of employee from one place to anotherRule 3(1)(3)
Lower of:-Actual charges paid by the employer;
or
-24% of salary;
as reduced by the rent, if any, paid by the employee.
Same as erstwhile provisions
I have been provided one single room accommodation in a hostel of my town ship. I pay full room rent fixed by the company on i.e.Rs.80.00 per day. I am eligible for a bunglow for which licence fee has been fixed by company. But since I am residing alone ,I have taken single room accommodation.My company is considering house perquisite @ 7.5% on my total salary . Please clarify ,if I am paying full room rent (Not the licence fee) House perquisite is applicable to me or not.
Sir
My question is for computing the frige tax benefit on housing, whether the slary alone to be taken or the gross income of the employee? or how? kindly clarify.
We are working for a 5 Star Hotel. Our GM is Expactriate and agreed on providing accommodation in our hotel at free of cost.
I understand if we provide accommodation in other hotels but would like to know if we provide in our hotel, what could be the perquisite value? Please clarify.
are the arrears of salary pertaining to past years to be taken in acount for calculating the house perquisite?
Dear Sir,
I am a Govt. employee. my employer has provided a flat on lease in Bangalore. The rent of flat is Rs. 15,000.00 monthly. My eligibility is Rs. 7,500.00. I have to make the payment of Rs. 15,000.00 to house owner and after producing receipt, my company reimburse me Rs. 7,500.00. What will be the perquisite.
With Regards
Rajeev Sharma
I’m getting family accomodation of Rs. 14000=00 per month in New Delhi by my Organisation and cheque is always made in the name of house owner.
Please reply how much home perquisite will be added in total income.
Regards,
AKP