Taxability of Furniture Provided to Employees along with ,Accommodation

The perquisite value of furniture (ie TV, AC, fridge, other household appliances, etc) shall be calculated in the manner given below. Further, such perquisite value shall be taxable in the hands of all kinds of employees, whether government or non- government.

•      Case 1 - If Furniture is NOT OWNED by the Employer:

If the employer has taken furniture on rent, the perquisite value in the hands of the employee shall be the rent charges paid by the employer. 

•      Case 2 - If Furniture is OWNED by the Employer:

If furniture is owned by the employer, the perquisite value in the hands of the employee shall be 10% p.a. of original cost of such furniture.

SOME SPECIAL POINTS

•               RFA Salary is to be computed on 'due' basis for the period for which rent free accommodation has been provided to the employee.

Example: If rent free accommodation is provided for the perioc starting from 01.01.2018 to 31.03.2018, then only the salary due for the months of January 2018, February 2018 & March 2018 shall be taken. Advance salary or arrears of salary shall not be included for this purpose.

•      Rent Free Accommodation Provided at Two Places:

Where an employee has been transferred from one place to another and he is provided with accommodation at the new place of posting while retaining the accommodation at the original place, perquisite value shall be determined as under:

Ø  For the initial 90 days: Perquisite value of only one of the accommodation shall be taxable. Obviously, the employee would prefer to choose the accommodation with lower perquisite value.

Ø  After 90 days: Perquisite value of both the accommodations shall be taxable.

•               Rent Free Accommodation Provided in Hotels:

Ø  There will be no perquisite value= in case of rent free accommodation provided in a hotel if the following two conditions are satisfied:

a)    Such accommodation is provided for a period not exceeding 15 days; and

b)    The accommodation has been provided on transfer of employee from one place to another.

Ø  If the above conditions are not fulfilled, the perquisite value shall be lower of the following:

a)    24% of RFA salary; or

b)    Actual expenditure incurred by the employer.

•               Rent Free Accommodation Provided in a Remote Area:

Rent free accommodation provided to any employee working in a miring site, oil-exploration site or project execution site or any other remote area is exempt from income tax in the hands of the employee.

•      Rent Free Accommodation Provided to Political Figures, Judges, etc:

Rent free accommodation provided to Judges of High Court/Supreme Court, Union Ministers, Leader of Opposition in the Parliament, Chairman and members of UPSC, etc is exempt from income tax in the hands of such persons.

ACCOMMODATION AT CONCESSIONAL RATES – {Section 17(2)(ii); Rule 3(1)}

•               Section 17(2)(ii) applies where the employer has provided accommodation to the employee and has recovered some amount from the employee. (Provisions of Section 17(2)(i) apply where accommodation is provided to the employees and no amount is recovered from the employee in return)

•               Perquisite Value for Cases Covered u/s 17(2)(ii):

If the amount withdrawn/received during a particular year is used for purchasing an annuity plan during the same year, the amount will not be taxable.

•               If the salaried employee/self-employed individual passes away, any amount received from NPS by the y nominee/legal heir is not taxable,

•               Where none of the above two cases gets attracted, the taxability of withdrawals shall be as follows:

➢      In case of self-employed individuals, no exemption is available under any section whatsoever. Therefore, the entire amount withdrawn by self-employed individuals shall be taxable in their hands irrespective of the fact whether such withdrawals are in the nature of regular withdrawals, partial withdrawals or withdrawals on closure of account.

➢      In case of salaried individuals, taxability of withdrawals would depend upon the nature of withdrawals.