CAF-2 · Chapter 5 · Question 3 of 10
Mr. Zaid is provided with a rent-free accommodation by his employer. His basic salary is Rs. 120,000 per month, but his minimum of time scale (MTS) is Rs. 100,000 per month. The annual fair market rent of the accommodation is Rs. 500,000. What amount will be added to his taxable salary for the accommodation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 540,000
Explanation
The amount to be included is the higher of the fair market rent (Rs. 500,000) or 45% of the MTS (45% x Rs. 100,000 x 12 = Rs. 540,000). Therefore, Rs. 540,000 will be added.
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