• Follow
   

Rent-free accommodation

Submited by- Team Sitagita on 19 Jul, 2011 CAREER  WORKING WOMEN  

Rate It
  Avg. Rating (0/5)1001 Reads1 Comment(s)
Be the first one to Like this post Like It (0)

This is another major tool for tax reduction, especially for senior executives. The taxable perquisite value of a rent-free house is calculated as 10 per cent of your salary - basic, allowances, bonus and commission, excluding DA, employer`s Provident Fund (PF) contributions, perquisites and tax-exempt allowances - plus the fair rental value of the house in excess of 60 per cent of your salary (for Calcutta, Chennai, Delhi and Mumbai), or in excess of 50 per cent of your salary for other places.

For example,let us assume that you reside in a metro, in a house provided by your employer, who pays rent and incurs a monthly expenditure of Rs.30,000 on it. And say, your monthly salary excluding perquisites, is Rs.50,000. Since the fair rental value of the house (Rs.30,000) amounts to 60 per cent of your salary, the taxable perquisite value of the rent-free house would be just 10 per cent of your salary, or Rs.5,000 per month. The effective reduction in your monthly taxable income: Rs.25,000.

House rent allowance. Instead of providing a rent-free house, most companies prefer to pay house rent allowance (HRA) to employees. Your HRA is exempt to the extent of the least of the following:

1. Excess of rent paid over 10 per cent of salary.

2. 50 per cent of salary (if you reside in any of the four metros).

3. 40 per cent of salary (for places other than the four metros).

4. Actual allowance paid.

Effectively, HRA of up to 10 per cent of your salary is taxable. You can avail of an exemption only when the rent paid by you exceeds 10 per cent of your salary.

Be the first one to Like this post Like It (0)

Share your views:

Sitagita Login
 
Post Comment

2.jpg

victoria1 (3 Years ago)

good

(0)
mark as a flag
 
 

POLL

Are you excited to see more of Andy in Big Boss 7?

Are you excited to see more of Andy in Big Boss 7?
 Yes26% | 36 votes
 No62% | 85 votes
 Whatever10% | 14 votes
Total Votes: 135
View all Polls

Follow Us

 
 

Most Active Members

Gilberte 16 points
Anguilla
Joined: 26 Jul, 2014 6 points gained today
3.jpg
greyau99 1 points
Hyderabad | India
Joined: 28 Jul, 2014 1 point gained today

Recent Activity on SitaGita

3.jpg
greyau99 likes a comment on Article
First Time Sex - Things to be kept i...
(8 Hours ago) Gains 1 point
Gilberte replied to the forum thread
Re: What do you think about fashion ...
(12 Hours ago) Gains 5 points
Gilberte likes a forum post
Re:What do you think about fashion n...
(12 Hours ago) Gains 1 point