Core rule: section 8(2)(b) includes cash housing allowance in employment income. For accommodation actually provided to an employee, section 27 and rule 13 prescribe a benefit valuation of 2% of the relevant salary base. The 2% rule does not apply merely because cash is labelled housing allowance.
Example: an employee receives NPR 120,000 annual cash housing allowance. The income inclusion is NPR 120,000. If the employer instead provides accommodation throughout the year and the applicable annual salary base is NPR 1,200,000, the prescribed benefit is NPR 24,000.
Check the actual arrangement and period of availability. An employer settling an employee's personal rent bill should not automatically be treated as providing qualifying accommodation. Keep the employment terms, payroll records and accommodation agreement.