Free On-Site Accommodation in Construction: How Does It Affect Your HRA Taxes?

Dear Senior HR,

If a company provides free accommodation to its employees on-site (we are in the construction industry), then their House Rent Allowance (HRA) component will be taxable.

Regards,
SAI

For the accommodation provided by your company, there will be a deduction in your payslip, is it right? If that is the case, before such deduction, your gross pay, your HRA as per your payslip counts. Fifty percent of your basic or fifty percent of your HRA, whichever is lesser, will be taken for calculation for your rent. I hope I have answered your question; if not, please get back.

Regards,
Ibrahim

Hello Ibrahim,

I don't think any HRA deduction is shown as tax deducted on any payslip, and no HRA can be claimed for free accommodation.

Regards,
Vivek

Ibrahim,

There is no deduction in the payslip; site accommodation will not be shown in the payslip; it's out of CTC.

I agree with Vivek, but when I checked with the tax consultant, he says the site accommodation charges will be considered perks, and HRA will not be taxable as per the norms.

Regards,

Hi Sai,

"I agree with Vivek, but when I checked with a tax consultant, he says the site accommodation charges will be perks and HRA will not be taxable as per the norms."

Just a point to add further to what your CA communicated. Either you can provide a site accommodation or HRA but NOT both, as it is not correct as per the norms of the IT Act.

Regards,
Rajat

Dear Sai,

All replies to your query are not correct and misleading. First of all, there cannot be a situation where HRA is given in the payslip and accommodation is also provided by the company. If this were the case, then the HRA provided in the payslip would be taxable, and 10% of your gross salary would be added to your salary as perquisites.

Ramesh Sharma