Rent free accommodation is taxable under section 17 (2) (1) of income tax under perquisite. The value of rent free accommodation provided to the assesse by the employer is a perquisite.
Accommodation provided to discharge official duty cannot be termed as perquisites: - perquisites have a simple meaning as personal advantage. The word would not apply to a mere reimbursement of a necessary disbursement. So in order to be a perquisite, the residential property should be for benefit of the assesse, and not to discharge duty assigned to him. [Saipem vs. ITO (2002) 254 ITR 2].
Rent free accommodation to foreign technicians on deputation cannot be a perquisite: - rent free accommodation can be a perquisite only when it is provided to the employee by the employer. When employee of the foreign company are on deputation in India with an Indian company, which provided the rent free accommodation , it would not constitute a perquisites within the meaning of section 17(2) of income tax act.[CIT vs. H.Link(2000) 244 ITR 93].
Accommodation at concessional rate of rent: - accommodation at concessional rate of rent is also a perquisites under section 17(2) (2) of income tax act. This concessional rate should be provided by the employer to the employee.