Understanding Tax Implications and Benefits of Company-Leased Accommodation: What Do You Know?

Hi Cite HR members,

Please help me with the issue of understanding... Is it true that the employee has to pay tax on the amount he/she has taken from the company for leased accommodation? If so, at what rate?

Alternatively, are there any benefits to taking a leased accommodation?

Thanks,
Ashi

Yes, an employee has to pay tax on the amount he/she has taken from the company for a leased accommodation. The rate depends on the place of availing the facilities. In metros, it's 15%, and in small towns, it's 7.5%.

This is applicable even if your own house is taken on company lease for your residential use. In such a case, you will have to pay income tax on rent as the owner and perquisite tax as an employee for availing the facility.

Many people opt for HRA when no such perquisite tax is applicable. But the amount will usually be less than the lease rent.

Hope this will serve your purpose.