SATHISHA V

ASSISTANT PROFESSOR IN MANAGEMENT

GOVERNMENT FIRST GRADE COLLEGE
NARASIMHARAAPURA CHIKAMAGALURU (D)
KARNATAKA
RENT FREE ACCOMMODATION AND ITS VALUATION
WHAT IS INCOME TAX
An income tax is a tax that government impose on
income generated by businesses and individuals
within their jurisdiction. Income taxes are a source of
revenue for governments. They are used to fund public
services, pay government obligation, and provide
goods for citizens.
Heads Of Income
 Income from salary
 Income from house property
 Profits and gains of business or profession
 Capital gains and
 Income from other sources
Rent free accommodation is one of
the important perquisite
 Perquisite : the term perquisite means the value of any
benefit attached to an office or position in addition to
basic salary or wage in terms of non monetary (not in
cash but in kind)

 Rent free accommodation means employer provide

house to the employee for residential purpose with
rent free can be called as rent free accommodation
Types Of Accommodation
 Furnished accommodation

 Unfurnished accommodation
Valuation of rent free
accommodation
RFA

GOVT EMPLOYEE NON GOVT EMPLOYEE

TYPE OF TAXABLE VALUE OF RFA

ACCOMMODATION
UNFURNISHED AMOUNT DETERMINED
BY GOVT
FURNISHED UNFURNISHED VALUE +
10% OF COST OF
FURNITURE OR HIRE
CHARGES (IF ANY)
Valuation of rent free
accommodation
RFA

GOVT EMPLOYEE NON GOVT EMPLOYEE

ACCOMMODATION OWNED ACCOMMODATION TAKEN ON

BY EMPLOYER RENT OR LEASE BY EMPLOYER
ACCOMMODATION OWNED BY
EMPLOYER
TYPE OF POPULATION POLUATION POPULATION
ACCOMMODATIO MORE THAN BETWEEN BELOW
N 25 LAKHS 10 LAKHS TO 10 LAKHS
25 LAKHS
UNFURNISHED 15% OF SALARY 10% OF SALARY 7.5 % OF SALARY
FURNISHED UNFURNISHED VALUE+ 10% OF COST OF
FURNITURE OR HIRE CHARGES (IF ANY)
WHEN ACCOMMODATION TAKEN
ON LEASE OR RENT BY EMPLOYER

UNFURNISHED Rent paid By the employer OR

Lease amount or 15% of salary
(Whichever is Least)

FURNISHED Unfurnished value + 10% Cost of

Furniture or Hire charges (if any)
Salary Includes For RFA
 Basic salary or wages
 Bonus
 Commission or fees
 Dearness allowance(if entering into retirement
benefits of the employee)
 Value of all taxable allowances, and
 Value of any monetary benefits
Example
 Mr. A is employed in X ltd which is situated at bangalore.
His particulars of income for the assessment year 2018-19
are :
 Basic salary Rs 10000 p.m
 Dearness allowance Rs 5000 p.m ( 30% enters into
retirement benefits)
 Bonus Rs 8000 p.a
 Commission Rs 2000 p.a
 Entertainment allowance Rs 500 p.m
house is owned by employer and he has provided furniture
which cost of Rs 200000.
Mr. A is non Govt employee working in Bangalore (population
exceeds 25 Lakhs) and house owned by employer
 Salary for RFA
Basic salary 10000*12 120000
DA ( 5000*12*30%) 18000
Bonus 8000
Commission 2000
Entertainment allowance 6000
Total salary for RFA 154000
Calculation of value of RFA
 Unfurnished value 23100
(154000*15%)
 Add 10% of cost of furniture 20000
(10% of 200000)
Taxable value of RFA 43100