Wednesday, September 7, 2016

Salaried employees's gateway to the tax haven!


LIGHTS, CAMERA,ACTION.....CUT-CUT-CUT! GOOD SHOT!

Everyone taxpayer hates taxes. No salaried employee likes it! They feel they are being robbed of their earning. They blame employers, they blame government and they blame HR and Finance and payroll for their Big loss! 

Have seen organisations doing all kinds of circus to devise a magical salary structure concoction that defies all laws of CBDT! Saves most on the Income Tax and employees praise the lord! 

It is possible to save lots of taxes if you approach it this way. For salaried employees, here are gateways to the tax haven! 

Please refer to directives from the Income Tax Department/CBDT. Check the link below-

It lists all components under benefits, salary, perquisites where employees income is exempted from Income Tax.:

For quick reference, below are sections where relief can be given to salaried employees (legally).

For easy reference, here below is what I recommend. Moreover, we need to make our BASIC COMPONENT  at least 50% of the gross. That will help on HRA part even when Basic is taxable.



               
10(14)
Telephone Allowance
Fully Taxable

10(14)
Fixed Medical Allowance
Fully Taxable

NON TAXABLE-THAT WE CAN ALLOW.


10(14)
Conveyance allowance granted to meet the expenditure on conveyance in performance of duties of an office
Exempt to the extent of expenditure incurred for official purposes
10.
10(14)
Travelling allowance to meet the cost of travel on tour or on transfer
Exempt to the extent of expenditure incurred for official purposes
11.
10(14)
Daily allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty
Exempt to the extent of expenditure incurred for official purposes
12.
10(14)
Helper/Assistant allowance
Exempt to the extent of expenditure incurred for official purposes
13.
10(14)
Research allowance granted for encouraging the academic research and other professional pursuits
Exempt to the extent of expenditure incurred for official purposes
14.
10(14)
Uniform allowance
Exempt to the extent of expenditure incurred for official purposes


THESE THREE ALSO WE CAN GIVE-

17(2)(viii) read with Rule 3(7)(iii)
Free food and beverages provided to the employee
 1) Fully Taxable: Free meals in excess of Rs. 50 per meal less amount paid by the employee shall be a taxable perquisite
 2) Exempt from tax: Following free meals shall be exempt from tax:
a) Food and non-alcoholic beverages provided during working hours in remote area or in an offshore installation;
b) Tea, Coffee or Non-Alcoholic beverages and Snacks during working hours are tax free perquisites;
c) Food in office premises or through non-transferable paid vouchers usable only at eating joints provided by an employer is not taxable, if cost to the employer is Rs. 50(or less) per meal.
54.
17(2)(viii) read with Rule 3(7)(iv)
Gift or Voucher or Coupon on ceremonial occasions or otherwise provided to the employee
a) Gifts in cash or convertible into money (like gift cheque) are fully taxable
b) Gift in kind up to Rs.5,000 in aggregate per annum would be exempt, beyond which it would be taxable.


17(2)(viii) read with Rule 3(7)(vi)
Free Recreation/ Club Facilities
 a)  Expenditure incurred by the employer towards annual or periodical fee etc. (excluding initial fee to acquire corporate membership) less amount recovered from the employee is a taxable perquisite
 b)  Expenses incurred on club facilities for the official purposes are exempt from tax.
 c)  Use of health club, sports and similar facilities provided uniformly to all employees shall be exempt from tax.


EXEMPTED CAR MAINTENANCE, DRIVER SALARY ETC
Motor Car is owned by the employee
2.1
Where maintenances and running expenses including remuneration of the chauffeur are met or reimbursed by the employer.
2.1-A
The reimbursement is for the use of the vehicle wholly and exclusively for official purposes
Fully exempt subject to maintenance of specified documents
Fully exempt subject to maintenance of specified documents
2.1-B
The reimbursement is for the use of the vehicle exclusively for the personal purposes of the employee or any member of his household (taxable in case of specified employee as well as non-specified employee)
Actual expenditure incurred by the employer minus amount recovered from the employee
2.1-C
The reimbursement is for the use of the vehicle partly for official purposes and partly for personal purposes of the employee or any member of his household.
Actual expenditure incurred by the employer minus Rs. 1800 per month and Rs. 900 per month if chauffer is also provided minus amount recovered from employee shall be taxable value of perquisite.
Actual expenditure incurred by the employer minus Rs. 2400 per month and Rs. 900 per month if chauffer is also provided minus amount recovered from employee shall be taxable value of perquisite.

FULLY EXEMPT-TRAINING AND EDUCATION COST OF EMPLOYEE-

Other Educational Facilities
Particulars
Taxable Value of Perquisites
Free educational facilities/ training of employees

Fully exempt

No comments:

Post a Comment