Income tax new rule: Now these people will have to pay less tax, tax department changed the rules
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Income Tax New Rule: How will the reduction in taxable value of rent-free accommodation by the Income Tax Department affect employees?
The benefit of this will be that these employees will have to spend less on house rent, due to which they will be able to save more money in their salary. They can save, this will increase their salary. If you work for a company and live in rent-free houses provided by the company, then there is a big news for such people. Actually, such people have got big relief from the Income Tax Department.
The department has changed the rules for valuation of rent-free accommodation. The Income Tax Department has reduced the tax for employees living in company accommodation. This will benefit the central and state government employees, because they are provided accommodation. The new rule has come into effect today from 1 September 2023.
Income tax rules on rent-free accommodation provided by company
In cities with population more than 40 lakh as per 2011 census, the salary is 10 per cent, while in cities with population more than 15 lakh but not more than 40 lakh as per 2011 census, it is 7.5 per cent of the salary. Rent-free value provided by an employer to an employee is taxable as perquisite.
What effect will this new rule have on employees?
The question that arises is what effect will the reduction in the taxable value of rent-free accommodation by the Income Tax Department have on the employees, given that the benefit to them will be that these employees will have to spend less rent on the house. So that they can save more money in their salary. Can do, this will increase their salary.
As such, employees who live in employer-owned/rented accommodation may see a decline in the value of rent-free, taxable perquisites, thereby reducing the tax burden. Clear’s founder and CEO Archit Gupta said that this will bring a little more money into his hands.
These taxpayers will benefit from this rule change
According to the CBDT notification, the changes are expected to particularly benefit high-income individuals who receive employer-provided housing allowances.
Will you benefit?
The tax and investment expert said the employer would have to look at the calculation of the perquisite in relation to the value of the rent-free. He further said that its direct impact will be visible on the salaries of the employees. ‘With lower taxes, the salary in hand will be higher.
The Central Board of Direct Taxes (CBDT) has notified amendments to the income tax rules for assessment of allowances for rent-free or concessional accommodation to employees by employers. The Finance Act 2023 had brought an amendment for the purposes of computing ‘perquisite’ in respect of the value of rent-free or concessional accommodation provided to an employee by his employer.
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