Inflation-linked Valuation of Rent-free Accommodation Covers House Taken on Lease/Rent | CBDT
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- Last Updated on 2 September, 2023
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Notification No. 72/2023, dated 29-08-2023
The Central Board of Direct Taxes (CBDT) has issued a corrigendum to amend Notification 65/2023, dated 18-08-2023. Said notification modifies norms for computing the value of rent-free accommodations provided to employees
The CBDT revised Rule 3 of the Income Tax Rules, 1962 in order to give effect to the amendments made by the Finance Act, 2023. The rule was revised to provide a revised procedure for the computation of Rent-free accommodation valuation. This included revised rates for the computation of the value of perquisite in the cases where the accommodation was owned by the employer or taken on lease or rental.
Further, an inflation-linked cap was introduced. It is provided that in case the same accommodation is provided to an employee for more than one year, the valuation in subsequent years will not exceed the first year’s valuation adjusted by the Cost Inflation Index.
However, the benefit of inflation-linked valuation is given only in the case of accommodation owned by the employer. It wasn’t clearly mentioned whether the benefit of inflation-linked valuation is available if the employer doesn’t own the accommodation and the same is taken on rent or lease.
Now, the CBDT has issued a corrigendum to clear the confusion. The board has amended the notification to provide that the benefit of the inflation-linked valuation for computing rent-free accommodation shall be available even if the employer takes the accommodation on lease or rent.
Click Here To Read The Full Notification
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