Question

Rent-free accommodation provided by an employer to an employee is ............

• A. Allowance under Section 10(13A) of the Income Tax Act
• B. Allowance under Section 10(1) of the Income Tax Act
• C. Perquisite as per Section 17(2) of the Income Tax Act
• D. Perquisite as per Section 16(2) of the Income Tax Act

Hint:

Rent-free accommodation, company cars, and medical benefits are examples of perquisites under Section 17(2) of the Income Tax Act, 1961.

Answer 1

The Correct Option is C

Step 1: Meaning of perquisite.
Under the Income Tax Act, 1961, perquisites are benefits provided by an employer to an employee in addition to salary or wages. These can be in cash or kind, such as housing, car, or other amenities.
Step 2: Legal reference.
Section 17(2) of the Income Tax Act defines “perquisites” and includes rent-free or concessional accommodation provided by the employer to the employee as part of taxable salary.
Step 3: Conclusion.
Hence, rent-free accommodation is treated as a perquisite under Section 17(2) of the Income Tax Act.