Under Rule 4 of the Income Tax Rules, 2002 the value of accommodation provided by the employer to the employee has to be taken as the amount which the employer would have paid to the employee in case the accommodation was not provided to him. In other words, for the purpose of calculation of value of the accommodation perquisite, the amount of house rent that would have been paid by the employer (if house was not provided) shall be included in the salary for tax purposes, the FBR said.
However, the value taken for this purpose was not less than 45 percent of the minimum of the time scale of the basic salary or the basic salary where there was no time scale. Due to this arrangement, an anomaly was being faced by the salaried persons serving at stations where house rent is admissible at the rate of 30 percent of the minimum of the time scale of basic salary but the value of accommodation provided by the employer taken for the purpose of taxation was 45 percent of the minimum of the time scale. This was causing hardships to the salaried persons serving in the "Mufasal" areas.
Now a change has been brought that where house rent allowance is admissible at the rate of 30 percent of the minimum of the time scale, the value of house perquisite taken for the purpose of taxation shall be an amount not less than 30 percent of minimum of the time scale of basic salary or the basic salary where there is no time scale.
According to the SRO. 716(I)/2008, "Provided further that where House Rent Allowance is admissible @ thirty per cent, the value taken for the purpose of this rule shall be an amount not less than thirty per cent of minimum of the time scale of basic salary or the basic salary where there is no time scale."