‘In-hand’ salary to increase? Income Tax department’s big announcement for salaried class

The Income Tax department has brought a piece of good news for salaried employees. The news is to bring relied to people juggling to make a balance between work and taxes.

The department has brought about changes in the rules regarding thee Rend-free accommodation given to employees. This alteration in the rules is concerned around the valuation of rent free homes.

Under the new rule, the valuation of rent free homes has been redefined. With this revision, employees earning high salaries will get a chance to save more money and potentially receive a comparatively higher portion of ‘in-hand’ salary.

The rules have been changed by the Central Board of Direct Taxes (CBDT). The new rules are to be effective from September 1. The valuations will be as follows:

• In cities with population over 40 lakh as per 2011 census, the valuation will be 10 percent of the salary, reduced from the earlier 15 percent.
• In cities with population between 15 lakh to 40 lakh as per the 2011 census, the valuation will be 7.5 percent of the salary, that is lower than the previous 10 percent.

Amit Maheshwari, Tax partner at AKM Global, highlighted that this revision will result in a reduced taxable base for employees availing adequate salary and accommodation from their employers.

Gaurav Mohan, CEO of AMRG & Associates emphasized that the 2011 census figures in the provision aims to rationalize the calculation of the pre-requisite value. He even said that this change is to lower the taxable salary for those benefitting from rent free accommodations.