Rent-free accommodation is a taxable salary perquisite.
Rent-free accommodation is a taxable salary perquisite. For non-government employer-owned housing, the base value is 10%, 7.5% or 5% of salary depending on 2011 Census population; leased housing uses the lower of actual lease rent or 10% of salary, less employee rent.
Government accommodation uses the licence-fee basis. Furnished housing adds 10% per year of furniture cost or actual hire charges. Hotel accommodation uses the special 24%-of-salary/actual-charge rule after the transfer-relief window.
Identify employer category and accommodation type; compute Rule 3 salary for the occupancy period; apply city-population or lease formula; subtract employee rent; add furniture; apply transfer and hotel exceptions.
An employer leases a flat for ₹42,000 per month. Rule 3 salary is ₹3,60,000 for the occupancy period, so 10% is ₹36,000. The unfurnished perquisite is the lower ₹36,000, less employee recovery, not the full ₹42,000 rent.
The example is an illustration, not a substitute for the taxpayer's facts. A change in status, period, payment mode, document, city, asset, relationship or scheme can change the result.
Search pages often state a rate or limit without identifying the governing base. The calculation must distinguish gross receipt from taxable profit, tax from TDS, a deduction from an exemption, salary from business income, and an accounting entry from the tax treatment.
| Decision point | Required treatment |
|---|---|
| Legal year | Use the Act, rules and notification effective for the income or transaction period |
| Taxpayer category | Confirm residence, age, entity, employee/business status and regime |
| Calculation base | Use the statutory definition rather than CTC, net bank receipt or accounting label |
| Ceiling or rate | Apply actual-amount, percentage, shared, lifetime and gross-income limits in sequence |
| Documentation | Link every input to an invoice, statement, contract, certificate or official record |
| Final output | Show tax, surcharge, cess, interest and TDS/TCS credits separately |
This page is written around the entities and concepts search engines expect for the topic: Rule 3, perquisite, rent-free accommodation, company car, salary. They are used only where relevant and are connected to the live calculator and knowledge hub rather than repeated mechanically.
For the complete rules on this topic, see the core guide: Perquisites Taxation: Rent-Free Accommodation, Company Car & Other Benefits.
See the broader Income Tax & Salary knowledge hub for related rules and calculators on this topic.
Rent-free accommodation is a taxable salary perquisite. For non-government employer-owned housing, the base value is 10%, 7.5% or 5% of salary depending on 2011 Census population; leased housing uses the lower of actual lease rent or 10% of salary, less employee rent.
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