Salary Rules from 1st September: The Central Board of Direct Taxes (CBDT) has implemented a new rule. The board has fixed the limit of Perquisite Valuation. This limit has been reduced as compared to earlier.
Salary Rules: The new month is about to start. Changes will be seen in many things from September 1. But, the biggest change will happen in the life of the employed person. From September 1, job seekers are going to have fun. Actually, there has been a change in the rules of his salary. After this change, more salary will come in hand. This will be applicable to those employees who have got a house to live on behalf of the employer and there is some deduction from their salary.
Actually, the Central Board of Direct Taxes (CBDT) has implemented a new rule. The Board has fixed the limit of Perquisite Valuation. This limit has been reduced as compared to earlier. If you understand Perquisite Valuation easily, then it means that the tax deduction in the salary of the employees who get the house from the office. CBDT has relaxed the rules related to valuation.
According to the notification of CBDT, now the tax deduction in salary in exchange for the house received from the office will be less. Its direct effect will be visible on your salary. Due to less tax, the salary received in hand will be more. This rule has been implemented from September 1. Meaning, there will be some more money in next month’s salary.
What are the rules regarding tax?
The Perquisite rule applies where residential accommodation has been provided to the employee by the company. The company gives this house to its employees to live in without rent. But, this is done under the perquisite rules of income tax. In this, rent is not paid but some part of the tax is deducted from the employee’s salary. The limit of Perquisite Valuation is fixed for this deduction only. It is added to the salary and then included in the tax calculation. It is decided on the basis of population of cities.
What changes happened?
The classification and boundaries of cities and population are now based on the 2011 census instead of the 2001 census. The revised population limit has been made 40 lakh instead of 25 lakh and 15 lakh instead of 10 lakh. The amended rules have reduced the perquisite rates to 10%, 7.5% and 5% of salary from the earlier 15%, 10% and 7.5% of salary.
| First categories and rates | Now new category and rates | ||
| population | Tax Rate (Perquisite) | population | Tax Rate (Perquisite) |
| More than 25 lakh | 15% | More than 40 lakh | 10% |
| Between 10 lakh and 25 lakh | 10% | Between 15 lakh and 40 lakh | 7.5% |
| Less than 10 lakh | 7.5% | Less than 15 lakh | 5% |
Central and state employees will also be involved
CBDT has reduced the limit of Perquisite Valuation by revising it as compared to earlier. Means now the Perquisite Valuation will be reduced in the salary of the employees instead of the house. According to the notification, this will include the Centre, State and any employee who is given residential property by the company to live in and the ownership of this property is with the company.
How will you get benefit?
If you also live in a house provided by the company and do not pay rent, then this rule will be beneficial for you. Due to reduction in the limit of Perquisite Valuation, tax liability will now be reduced. Less tax will be deducted from salary than before and the in-hand salary will be higher.
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