It means

free house provided by Employer to Employee.

Such house may be taken on rent by Employer or owned   by Employer

In this case, taxable Perquisite is calculated as follows

 

  RFA (Rent Free Accomodation) and Accomodation at Concessional Rent - Taxability of Perquisites

Meaning of Salary for RFA

Here Salary means

  = Basic

   + DA (Included in Retirement Benefits) 

            + Taxable Allowance

This Salary is taken at due basis

However Salary does not include

(a)Perquisites

(b)Employers contribution to PF

(c)Exempt Allowance

(d)DA (Not forming part of Retirement Benefits)

(e)Perquisites like Medical Reimbursements/ESOP [ Employee stocks option plan]

 

Q1  

   
Basic Salary 100000 pm
He is given free house by compay  
Rent paid for the house by Company directly 20000 pm

  Calculate  RFA Perquisite and Income from Salary?

--answer--

   
Salary for RFA 100000
   
15% OF SALARY 15000
   
Rent Paid 20000
   
LOWER OF ABOVE 15000
   
   
RFA TAXABLE p.m 15000
RFA TAXABLE p.a 180000

COMPUTATION OF INCOME FROM SALARY

 

PARTICULARS AMT  RECD EXEMPT TAXABLE
BASIC SALARY 100000   100000
RFA Perquisite     15000
Total 100000   115000
Income from salary     115000*12=1380000

--endanswer--

Q2

Basic Salary 20000
DA (included in Retirement Benefits) 10000
Children Education Allowance 1500
(500*3 Child)  
Electricity Bill Reimbursement 1000
Free Alto Car for Employee  
Car Cost 300000
He is given free house by compay  
Rent paid for the house by Company directly 10000
 

Calculate  RFA Perquisite and Income from Salary?

--answer--

SALARY OF RFA

PARTICULARS AMT RECD EXEMPT TAXABLE
Basic Salary 20000 0 20000
DA (included in Retirement Benefits) 10000 0 10000
Children Education Allowance 1500 200 1300
SALARY FOR RFA     31300

   RFA PERQUISITE

       
SALARY FOR RFA     31300
15% OF SALARY     4695
Rent Paid     10000
RFA Perquisite :-LOWER OF ABOVE      4695

COMPUTATION OF INCOME FROM SALARY

PARTICULARS AMT RECD EXEMPT Amt taxable
BASIC SALARY 20000 0 20000
DA (included in Retirement Benefits) 10000 0 10000
Children Education Allowance 1500 200 1300
Electricity Bill Reimbursement 1000   1000
Car Perquisite     600
RFA Perquisite     4695
Income from Salary      37595
Annual Income from Salary     451140

--endanswer--  

RFA FOR FURNISHED HOUSE

Sometimes,furnished house given to employee i.e it has funiture and Machines like AC etc in it.

In that case,we will take

10% dep on them

or

rent paid by Co on them

to calculate RFA Perquisite

 

Q3 Suppose in Q2

   
COMPANY HAS TAKEN AC ON RENT 1000
COMPANY HAS PUCHASED FURNITURE 30000
CALCULATE RFA PERQUISITE   

--answer--

   
RFA FOR UNFURNISHED HOUSE 4695
(AS PER Q2)  
ADD  
RENT ON AC 1000
ADD  
10% DEP ON FURNITURE 250
(30000*10%*1/12)  
RFA FOR FURNISHED HOUSE 5945

--endanswer--

 

ACCOMODATION AT CONCESSIONAL RENT

In this case,house is not given free.Some Rent is charged from employee.

In this case,computation made as follows

 

   
RFA FOR FURNISHED HOUSE xx
Less  
Rent Charged from Employee XX
BALANCE AMT TAXABLE AS ACCOMODATION AT CONCESSIONAL RENT XX

 

 

Q4

Suppose in last question,House given is not free

Company Charges Concessional Rent of 2000 pm

--answer--

   
RFA FOR FURNISHED HOUSE 5945
Less  
Rent Charged from Employee 2000
BALANCE AMT TAXABLE AS ACCOMODATION AT CONCESSIONAL RENT 3945

Note

If Employee receives salary from more than one Employer then both salaries to be taken .

 

  1. Income Tax
  2. Income from Salaries
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.