What Is The Full Form Of RFA In Income Tax?
RFA full form in income tax is Rent Free Accommodations. This means that an employer gives housing to an employee without charging rent. This kind of housing is considered a bonus or “perk” and its value must be added to the employee’s taxable income. The amount of RFA it’s worth is determined through a few questions: whether the place has furniture in it, its location, and whether the place is owned by the employer or not.
Calculating Tax on RFA:
The tax value of RFA mainly depends on where the accommodation is and whether it has furniture. If the place is not furnished and the landlord is the employer, the tax applies from 7.5% to 15% of the employee’s salary. The percentage varies with where the property is located like in which city or state. Again, if the place has furniture, an extra 10% of the cost of the furniture or the actual rent for the furniture is added to this tax amount.
What’s In It For Government Workers?
ARA value is usually worked out by most government workers with a fee set by the Central or State Government and becomes due when they leave service. The exception would be for furniture items, which would attract a higher fee. For the workers in the non-government jobs, the new rules use the size of the city’s population to decide the tax applying from September 2023, as they consider either the lower value between what the lease rent is or a set percentage of the employee’s salary.