Page 188 - DCOM301_INCOME_TAX_LAWS_I

Unit 7: Income under the Head Salaries

and fixtures in respect of the period during which the said accommodation was Notes
occupied by the assessee during the previous year, exceeds the rent recoverable
from, or payable by, the assessee;
(ii) the accommodation is taken on lease or rent by the employer, the value of the
accommodation determined under sub-clause (ii) of clause (a) as increased by the
value of the furniture and fixtures in respect of the period during which the said
accommodation was occupied by the assessee during the previous year, exceeds the
rent recoverable from, or payable by, the assessee;
(d) in a case where the accommodation is provided by the employer in a hotel (except where
the assessee is provided such accommodation for a period not exceeding in aggregate
fifteen days on his transfer from one place to another), the value of the accommodation
determined at the rate of twenty-four per cent of salary paid or payable for the previous
year or the actual charges paid or payable to such hotel, whichever is lower, for the period
during which such accommodation is provided, exceeds the rent recoverable from, or
payable by, the assessee.
Explanation 2: For the purposes of this sub-clause, value of furniture and fixture shall be ten per
cent per annum of the cost of furniture (including television sets, radio sets, refrigerators, other
household appliances, air-conditioning plant or equipment or other similar appliances or gadgets)
or if such furniture is hired from a third party, the actual hire charges payable for the same as
reduced by any charges paid or payable for the same by the assessee during the previous year.

Explanation 3: For the purposes of this sub-clause, “salary” includes the pay, allowances, bonus
or commission payable monthly or otherwise or any monetary payment, by whatever name
called, from one or more employers, as the case may be, but does not include the following,
namely:
(a) dearness allowance or dearness pay unless it enters into the computation of superannuation
or retirement benefits of the employee concerned;
(b) employer’s contribution to the provident fund account of the employee;
(c) allowances which are exempted from the payment of tax;

(d) value of the perquisites specified in this clause;
(e) any payment or expenditure specifically excluded under the proviso to this clause.]
Explanation 4: For the purposes of this sub-clause, “specified rate” shall be –
(i) fifteen per cent of salary in cities having population exceeding twenty-five lakhs as per
2001 census;
(ii) ten per cent of salary in cities having population exceeding ten lakhs but not exceeding
twenty-five lakhs as per 2001 census; and
(iii) seven and one-half per cent of salary in any other place;
(iv) the value of any benefit or amenity granted or provided free of cost or at concessional rate
in any of the following cases:
(a) by a company to an employee who is a director thereof;
(b) by a company to an employee being a person who has a substantial interest in the
company;
(c) by any employer (including a company) to an employee to whom the provisions of
paragraphs (a) and (b) of this sub-clause do not apply and whose income under the
head “Salaries” (whether due from, or paid or allowed by, one or more employers),

LOVELY PROFESSIONAL UNIVERSITY 183