The Central Board of Direct Taxes (CBDT) on 19 August issued a notification to worth rent-free lodging supplied by employers, reported information company PTI.
According to the brand new notification, the workers having rent-free lodging supplied by their employers and drawing substantial salaries can now save extra and get a better take-home wage because the revenue tax division revised norms.
These new norms will come into impact from 1 September.
According to the notification, apart from the central or state authorities staff the place unfurnished lodging is supplied to staff and such lodging is owned by the employer then the valuation shall be: (i) 10 % of wage (lowered from 15 %) in cities having a inhabitants exceeding 40 lakhs as per 2011 census (earlier, 25 lakhs as per 2001 census), (ii) 7.5 % of wage (lowered from 10 %) in cities having a inhabitants exceeding 15 lakhs however not exceeding 40 lakhs as per 2011 census (earlier, 10 lakhs however not exceeding 25 lakhs as per 2001 census).
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Experts communicate:
Commenting on the brand new IT norms, AKM Global Tax Partner Amit Maheshwari stated contemplating staff who’re drawing substantial salaries and receiving lodging from the employer, they may be capable of save extra since their taxable base goes to be lowered now with the revised charges. “The perquisite value shall be lower resulting in relief to them in the form of take-home pay,” Maheshwari stated.
Speaking on comparable traces, AMRG & Associates CEO Gaurav Mohan stated these provisions incorporate the insights 2011 census knowledge and intention to rationalize the perquisite worth calculation.
“Employees enjoying rent-free accommodation would see the rationalisation of perquisite value leading to a reduction in taxable salary, increasing the net take-home pay. It is worth noting that the reduction in the perquisite value of rent-free accommodations will yield dual implications: on the one hand, it will generate tangible savings for employees, while on the other hand, it will result in a corresponding decrease in government revenue,” Mohan stated.
Apart from this, Mohan stated that lower-income staff with extra modest lodging won’t expertise vital tax aid. However, he talked about the adjustments would result in disproportionate advantages for higher-income staff who obtain costly lodging.
Adding extra, Mohan stated the shift would possibly immediate company employers to strategically revisit and doubtlessly reshape their present compensation frameworks, particularly if they’ll capitalize on tax benefits for his or her workforce.
With company inputs.
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Updated: 19 Aug 2023, 02:58 PM IST
