How is the taxable value of rent-free or concessional accommodation determined?

The taxable value of rent-free or concessional accommodation provided by an employer is determined based on specific rules outlined in Rule 3(1) of the Income Tax Rules, 1962. The value is calculated as a percentage of the employee’s salary, based on factors such as the type of accommodation (furnished or unfurnished), location (population), and employee’s status (government or non-government). For instance, the taxable value of an unfurnished accommodation in a city with a population exceeding 25 lakhs is 15% of the employee’s salary.

Legal Provision: Rule 3(1) of the Income Tax Rules, 1962

Supporting Case Law:
– Commissioner of Income Tax v. Shankar Krishnan (2012) – Supreme Court – Civil Appeal No. 5749 of 2012
– Link: https://indiankanoon.org/doc/124539650/
– Ratio: The Supreme Court upheld the taxability of rent-free accommodation as a perquisite under Section 17(2) and the valuation rules prescribed in Rule 3(1) of the Income Tax Rules, 1962.