TaxTMI 
TaxTMI 
Rule 3(a) to (c) of Income-tax Rules - Valuation of perquisites represented by rent-free residential accommodation, residential accommodation at concessional rent and motor cars - Effect of amendments made by Income-tax (Amendment) Rules, 1974
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....d of Direct Taxes on February 28, 1974, have substituted clauses (a), (b) and (c) of rule 3 of the Income-tax Rules, 1962, relating to valuation of certain perquisites by three new clauses. The new clauses have made certain modifications in the provisions relating to the valuation of the perquisites by way of free residential accommodation and motor cars provided by employers to their employees. The salient features of the new provisions are explained hereunder. 2. Valuation of rent-free residential accommodation - Salaried taxpayers have been classified into three broad categories for the purposes of determining the value of the perquisite by way of rent-free residential accommodation provided to them. The first catego....
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....ersons referred to in (a) to (d) above, the perquisite value of unfurnished rent-free residential accommodation will be taken to be 10 per cent of the salary due to the person in respect of the period during which the residential accommodation was occupied by him in the relevant previous year. [For the purposes of computing the perquisite value of rent-free residential accommodation, the term "salary" will include pay, allowances, bonus or commission payable monthly or otherwise but will not include (i) dearness allowance or dearness pay, unless it enters into the computation of superannuation or retirement benefits; (ii) employer's contribution to the provident fund account of the employee; (iii) allowances which are exempted f....
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....perquisite (computed on the basis of 10 per cent of the salary) by so much of the excess of the fair rental value over 20 per cent of the salary, as he may, having regard to the nature of the accommodation, deem fit. In the case of employees residing at Bombay, Calcutta, Delhi and Madras, the existing instructions of the Board would continue to apply and, as such, only the excess over 30 per cent of the salary will be added to the basic valuation of 10 per cent of the salary in such cases. If the employee is provided with furnished residential accommodation, the value of the perquisite will first be computed as if the accommodation were unfurnished and then increased by an amount equal to 15 per cent of the original cost of the furnit....
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....nd tear of the motor car (in cases where the motor car is owned by the employer), which is attributable to the user of the car by the employee for his private or personal purposes, will be taken as the value of the perquisite in the hands of the employee. [In this connection, it may be noted that the use of a motor car by an employee for the purposes of going from his residence to the place where the duties of employment are to be performed or from such place back to his residence, will be regarded as use of the motor car for private or personal purposes and not in the performance of his duties]. If the computation of the value of the perquisite on the aforesaid basis presents any practical difficulty, the value of the perquisite will....
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.... any one of these motor cars exceeds 16 or the cubic capacity of the engine of any one of these motor cars exceeds 1.88 litres, the value of perquisite will be computed as if the employee had been provided with a motor car with horse power exceeding 16. Further, if a chauffeur is provided by the employer to run any of these motor cars, the value of the perquisite will be increased by a sum of Rs. 150 per month. 8. If the employee owns a motor car but the actual running and maintenance charges (including salary of the chauffeur, if any) are met or reimbursed by the employer, proportionate part of the expenditure borne by the employer as is reasonably attributable to the user of the motor car by the employee for his private or person....