• twitter-icon
Unlimited Tax Return Filing


IT Notification No. 65/2023: Revised Rules for Employed Taxpayers W.E.F. 1st Sept

Income Tax Notification No. 65/2023 for Salaried Taxpayers

The Central Board of Direct Taxes (CBDT) has introduced modifications in the income tax regulations concerning the assessment of benefits related to employer-provided rent-free or discounted housing for employees. These amendments, effective from September 1, 2023, will result in reduced tax liability for employees receiving rent-free accommodations, which will be subject to higher take-home pay.

The Finance Act of 2023 introduced an amendment specifically addressing the calculation of ‘perquisite’ related to the value of rent-free or concessional housing provided by employers to their employees. The new income tax rules, aimed at providing tax relief to taxpayers, states the following:

  • In cities with a population exceeding 40 lakhs according to the 2011 census, 10 percent of the salary will be considered for taxation.
  • In cities with a population exceeding 15 lakhs but not exceeding 40 lakhs according to the 2011 census, 7.5 percent of the salary will be considered for taxation.
Previous Categorisation and RatesNew Categorisation and Rates
PopulationPrerequisite RatePopulationPrerequisite Rate
More than 25 lakh15%More than 40 lakhs10%
Between 10 lakhs and 25 lakh10%Between 15 lakhs and 40 lakhs7.5%
More than 25 lakh7.5%Less than 15 lakhs5%

A “perquisite” is described as any incidental payment or advantage linked to a job or position, in addition to regular salary or wages. This definition is mentioned in Section 17(2) of the Income Tax Act, of 1961.

Rent-free housing is a benefit provided by employers to their employees, offering them a place to live without or with minimal cost. It’s a form of employee compensation subject to taxation under the “Salaries” category and is linked to their employment.

Read Also: Big Reason, Why Few Taxpayers Are Selecting New Tax Regime?

The new income tax rules will have an impact on taxpayers beyond any question. Employees will receive a reduction in their tax burden given the decreased taxable value of rent-free housing, resulting in higher take-home pay. Starting from September 1, 2023, these amendments will reduce the valuation of unfurnished rent-free accommodations from non-government sources, effectively reducing the taxable portion based on the revised rates.

Disclaimer:- "All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check."

Published by Arpit Kulshrestha
Arpit Kulshrestha seeks higher interests in financial services, taxation, GST, I-T, etc. Writes articles with depth knowledge and is extensive for the same. The resources provide effective articles for the products of SAG infotech which provides taxation and IT software. Writing from observations and researching makes his articles virtuous. View more posts
SAGINFOTECH PRODUCTS

Leave a comment

Your email address will not be published. Required fields are marked *

Follow Us on Google News

Google News

Latest Posts

New Offer for Professionals

Super Tax Offer

Upto 20% Off
Tax, ROC/MCA, XBRL, Payroll, Online GST

Limited Offer, Hurry

Big Offer for Tax Experts

Upto 20% Discount on Tax Software

    Select Product*

    Genius Software