CBDT Amends Valuation Rules for Accommodation Perquisite, Effective September 1, 2023

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The Central Board of Direct Taxes (CBDT) has introduced amendments to the valuation of perquisites for accommodation provided by employers. These amendments are effective from September 1, 2023.

Key changes:

  • Change in perquisite rates and city categorization: The amendment changes the categorization and limits of cities and populations, along with revised perquisite rates based on the 2011 census, compared to the 2001 census used previously.
  • Introduction of Cost Inflation Index (CII): Where the employee continues to occupy the same accommodation (provided by the employer) for more than one year, the perquisite valuation for the subsequent years will be capped to an extent by the introduction of the Cost Inflation Index (CII).
  • Change in plinth area and definition of remote work: Temporary accommodation provided to employees at select sites will not be taxable as a perquisite, if the following conditions are satisfied:
    • The accommodation has a plinth area not exceeding 1,000 square feet (increased from 800 square feet previously) and is located not less than eight kilometers away from the local limits of any municipality or cantonment board; or
    • The accommodation is located in a remote area.

Remote area is defined as any area other than an area which is located within the local limits of, or within a distance of 30 km (down from 40 km previously) from the local limits of, any municipality or a cantonment board having a population of one lakh (increased from 20,000 previously) or more, based on the 2011 census.


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