Page 197 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes
Did u know? Accommodation includes a house, flat, farm house, hotel accommodation,
motel, service apartment, guest house, a caravan, mobile home, ship, etc.
The value of any accommodation provided to an employee working at a mining site or an
on-shore oil exploration site or a project execution site or a dam site or a power generation
site or an off-shore site will not be treated as a perquisite.
However, such accommodation should either be located in a “remote area” or where it is
not located in a “remote area”; the accommodation should be of a temporary nature
having plinth area of not more than 800 square feet and should not be located within 8
kilometres of the local limits of any municipality or cantonment board. A project execution
site for the purposes of this sub-rule means a site of project up to the stage of its
commissioning.

Notes A “remote area” means an area located at least 40 kilometres away from a town
having a population not exceeding 20,000 as per the latest published all-India census.

If an accommodation is provided by an employer in a hotel the value of the benefit in such
a case shall be 24% of the annual salary or the actual charges paid or payable to such hotel,
whichever is lower, for the period during which such accommodation is provided as
reduced by any rent actually paid or payable by the employee. However, where in cases
the employee is provided such accommodation for a period not exceeding in aggregate
fifteen days on transfer from one place to another, no perquisite value for such
accommodation provided in a hotel shall be charged.

It may be clarified that while services provided as an integral part of the accommodation,
need not be valued separately as perquisite, any other services over and above that for
which the employer makes payment or reimburses the employee shall be valued as a
perquisite as per the residual clause. In other words, composite tariff for accommodation
will be valued as per these Rules and any other charges for other facilities provided by the
hotel will be separately valued under the residual clause.
Also, if on account of an employee’s transfer from one place to another, the employee is
provided with accommodation at the new place of posting while retaining the
accommodation at the other place, the value of perquisite shall be determined with reference
to only one such accommodation which has the lower value as per the table prescribed in
Rule 3 of the Income Tax Rules, for a period up to 90 days. However, after that the value of
perquisite shall be charged for both accommodations as prescribed.
2. Valuation of Motor Car as a Perquisite: The valuation of perquisite in respect of motor car
provided to the employee shall be calculated in different situations in different ways such
as car may be used by the employee wholly for business use or used partly for personal
use or partly for business use.

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