Housing · perquisite
Rent-free accommodation
Unfurnished accommodation provided free is valued as a percentage of salary that varies with city population.
How the taxable value is determined
10% of salary where city population exceeds 40 lakh, 7.5% between 15 and 40 lakh, and 5% elsewhere; hotel accommodation is valued at 24%. Salary here excludes perquisites.
Regime availability
- Old regime
- Prescribed value applies
- New regime
- Prescribed value applies
Documentation to keep
Employer's accommodation records and population basis applied.
Legal basis: Rule 3(1), Income-tax Rules
Frequently asked questions
Is rent-free accommodation taxable in India?
Unfurnished accommodation provided free is valued as a percentage of salary that varies with city population. 10% of salary where city population exceeds 40 lakh, 7.5% between 15 and 40 lakh, and 5% elsewhere; hotel accommodation is valued at 24%. Salary here excludes perquisites.
Does the exemption apply under the new tax regime?
Under the old regime this treatment is not applicable — the value is prescribed, not exempted; under the new regime it is not applicable — the value is prescribed, not exempted. Legal basis: Rule 3(1), Income-tax Rules.
What records should I keep for rent-free accommodation?
Employer's accommodation records and population basis applied.
Related tools & guides
Reflects provisions in force for FY 2026-27; verify against the latest government publications (incometax.gov.in). Information, not tax advice.