Perquisites- Taxability of Hotel Accommodation Provided by Employer (Section 17(2))

When an employer provides accommodation in a hotel, guest house, or similar facility, its taxability depends on:

• Duration of stay
• Purpose of stay (official vs. personal)
• Nature of employment (transfer, project, etc.)

1. When Hotel Accommodation is Taxable

(A) For Non-Government Employees (Private Sector)

• Fully Taxableif the stay is for personal reasons (e.g., vacation, non-work-related stay).
• Taxable Value = Actual Hotel Cost Borne by Employer

(B) For Government Employees

• Taxable if used for non-official purposes(similar to private employees).

(C) For Specified Employees (Directors, High-Salary Employees)

• Always taxable(even if for official purposes beyond exemption limits).

2. When Hotel Accommodation is Tax-Exempt

(A) Short-Term Stay (Official Work)

• Exempt if stay is ≤15 days(for temporary assignments, training, or business travel).
• Example:An employee sent to another city for a 10-day conference.

(B) Transfer-Related Stay

• Exempt for up to 15 dayswhen relocating to a new job location.
• Beyond 15 days, perquisite value becomes taxable.

(C) Project/Remote Site Employees

• Exempt if hotel stay is mandatory due to work location(e.g., mining sites, offshore projects).

3. Calculation of Taxable Value

• If taxable, the perquisite value is the actual hotel cost paid by the employer(room rent + meals + other charges).
• No standard deduction(unlike rent-free accommodation).

Example:

• Employee stays in a 5-star hotel for 20 days (personal use).
• Hotel bill = ₹2,000/day (₹40,000 total).
• Taxable perquisite = ₹40,000 (added to salary income).

4. Compliance & Reporting

• Employer must reportin Form 16 under “Perquisites.”
• Employee must disclosein ITR under “Income from Salaries.”

Note:

• Meals provided by the hotelmay be separately exempt if within ₹50/meal (official exemption).
• GST-paid billshelp in accurate valuation.