Taxability of Guest house

[Amit Parekh]

Hello everyone,

             My query is as follows:

My Company has taken a flat on rent. The Australian client of company stays in the flat whenever he visits India. Apart from that an employee of company stays in that flat. So is the flat taxable as rent free accomodation in employee's hand or we can take a stand that as client also stays in that flat, it is like a guest house which is not taxable for employee as well as company. Pl explain tax consequenses

Thanks in advance

Amit Parekh

 

[CAGOPALJI AGRAWAL]

Please let us know who is bearing the other charges like maintenance, electricity etc.

AI Summary

Perquisite taxability of employer-provided accommodation questioned when premises used by client and employee; treatment turns on payment of running expenses. Whether employer-provided accommodation used by both a visiting client and an employee is a taxable perquisite to the employee or can be treated as a company guest house; the adviser asks who bears recurring charges such as maintenance and electricity, since allocation of running expenses is material to the tax characterisation of the benefit.