Valuation of RFA

Valuation of Rent Free Accommodation

Valuation of rent-free unfurnished accommodation (RFA)
[Rule 3(1)]

Central and State Government Employee (including military person)

The value of perquisite in respect of such accommodation is equal to the licence fee, which would have been determined by the Central or State Government in accordance with the rules framed by the Government.

Accommodation provided by Government to an employee serving on deputation

Where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government, then the value of perquisite of such an accommodation shall be:

City in which accommodation is provided	Value of perquisite
Having population exceeding 25 lacs as per 2001 census	15% of salary for the period during which the employee occupied the said accommodation.
Having population exceeding 10 lacs but not exceeding 25 lacs as per 2001 census	10% of salary for the period during which the employee occupied the said accommodation.
Any other city	7.5% of salary for the period during which the employee occupied the said accommodation.

Salary for the purpose of Rent free accommodation: Salary here means:

Basic + Dearness allowance/pay (if it forms a part of retirement benefit) + Bonus + Commission + Fees + All other taxable allowances (only taxable amount) + Any other monetary payment by whatever name called ( excluding perquisites and lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments )

Other Employees (residual category)

The value of perquisite is determined as per the following table:

City in which accommodation is provided	Accommodation is owned by the employer	Accommodation is not owned by the employer
Having population exceeding 25 lacs as per 2001 census	15% of salary for the period during which the employee occupied the said accommodation.	Rent paid or payable by the employer or 15% of salary, whichever is lower.
Having population exceeding 10 lacs but not exceeding 25 lacs as per 2001 census	10% of salary for the period during which the employee occupied the said accommodation.
Any other city	7.5% of salary for the period during which the employee occupied the said accommodation.

Notes

Salary here means:
Basic + Dearness allowance/pay (if it forms a part of retirement benefit) + Bonus + Commission + Fees + All other taxable allowances (only taxable amount) + Any other monetary payment by whatever name called ( excluding perquisites and lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments).
Salary shall be determined on due basis from employer(s) for the relevant period.
Exemption of 90 days in case of two house allotment : Where an employee is transferred from one place to another and he is provided with an accommodation at new place also, the value of perquisite shall be taken for only one such house having lower value for a period not exceeding 90 days. Thereafter, the values of both such houses are taxable.
Any accommodation provided to an employee working at a mining site; or an on-shore oil exploration site; or a project execution site; or a dam site; or a power generation site; or an off-shore site, which being of a temporary nature and having plinth area not exceeding 800 sq.ft. is located not less than 8 kms away from the local limits of any municipality or a cantonment board or is located in a remote area.
Remote area here means an area located at least 40 K.M. away from a town having population not exceeding 20000 as per latest published census.
Rent-free official residence provided to a Judge of a High Court or the Supreme Court is exempt. Rent-free furnished residence (including maintenance thereof) to Official of Parliament, a Union Minister or a Leader of opposition in Parliament is exempt.

Valuation of rent-free furnished accommodation

Furnished accommodation means Accommodation + Furniture.

Value of Furnished accommodation = Value of accommodation + Value of furniture

Valuation of Accommodation: As discussed above.

Valuation of Furniture: As per the following table

Case	Taxable value
Furniture owned by the employer	10% of original cost of furniture
Furniture hired by the employer	Actual hire charges paid/payable by the employer

Notes:

'Furniture' here, includes refrigerator, television, radio, air-conditioner and other household appliances, etc.
The above rule is applicable to Government as well as Non-Government Employees.

Valuation of accommodation provided at concessional rent

Valuation will be made as if the rent-free accommodation is provided and the amount so computed will be reduced by the rent payable by the employee.

Value of Rent free accommodation as usual	*****
Less : Rent payable by employee to employer for the above facility	****
Taxable value of perquisite	********

Accommodation provided in a hotel

In this case, value of perquisite shall be minimum of the following:

24% of salary for the period such accommodation is provided; or
Actual charges paid or payable to such hotel.

However, if the following conditions are satisfied then nothing is taxable -

Such accommodation is provided for a period not exceeding in aggregate 15 days; and
Such accommodation is provided on transfer of employee from one place to another place.

Note:

If the employee pays any rent, the value so determined shall be reduced by the rent actually paid or payable by the employee
If the facility is provided for more than 15 days, then the perquisite is exempt for first 15 days and thereafter taxable.