Hi All, I'm in need of some much-needed help in understanding one of the offers I have received. This offer looks pretty good, and I'm always wary of things that look too good .
Understanding "Other Allowance"
In the offer letter, there is a component labeled "Other Allowance," and apart from that, there are five separate allowances as well. I don't understand what this "Other Allowance" is and what its breakdown is. My primary question is whether I will receive the below-mentioned "Other Allowance" in my monthly salary or not. Additionally, what are some hidden aspects that I should be careful about?
I don't know how to attach something here, so let me just paste it.
Salary Components
- **Basic:** Annual: 300,000 | Monthly: 25,000
- **Conveyance Allowance:** Annual: 9,600 | Monthly: 800
- **Dress Allowance:** Annual: 12,000 | Monthly: 1,000
- **Educational Allowance:** Annual: 2,400 | Monthly: 200
- **Bonus/Ex Gratia:** Annual: 8,400 | Monthly: 700
- **Food Coupons:** Annual: 36,000 | Monthly: 3,000
- **Gratuity:** Annual: 15,000 | Monthly: 1,250
- **HRA:** Annual: 150,000 | Monthly: 12,500
- **Variable:** Annual: 0 | Monthly: 0
- **Leave Travel Allowance:** Annual: 37,500 | Monthly: 3,125
- **Medical:** Annual: 15,000 | Monthly: 1,250
- **Fuel & Maintenance Allowance:** Annual: 39,600 | Monthly: 3,300
- **Other Allowances:** Annual: 335,140 | Monthly: 27,928.33
- **Employer Contribution to PF:** Annual: 9,360 | Monthly: 780
- **Telephone Allowance:** Annual: 30,000 | Monthly: 2,500
Total Annual: 1,000,000
*Annual Incentive: 100,000 (Please note Annual Incentive is separate and performance-based.)
Optional Allowances
Please note that you have an option to choose between:
1. Food Allowance
2. Medical Reimbursements
3. Dress Reimbursements
4. Leave Travel Assistance
5. Telephone Reimbursements
6. Fuel and Maintenance Reimbursements
Subject to the detailed rules in relation to each of these allowances, you can avail of any or all of these four tax-saving allowances. If you do not opt for any of these, the respective amounts will be taxable and be paid as part of "Other Allowances."
Food Allowance
Sodexho Coupons will be issued for Rs. 1,000/- or Rs. 2,500/- against Food Allowance for those who opt for the same. This will attract a 3% service charge. The amount deducted from your salary against food allowance is entirely non-taxable.
Reimbursements
Medical, Dress, Fuel, and Vehicle Maintenance reimbursement amounts will be non-taxable and will be paid on a quarterly basis against the appropriate enclosures/bills produced with appropriate forms duly filled. If bills are not produced during a quarter, this allowance gets carried forward to the next quarter. During the financial year, you have two more chances (2nd & 3rd quarter) to submit appropriate bills for reimbursement of the amount in a non-taxable manner. If bills of claim are not submitted until the last quarter (4th quarter) of a financial year, then the unclaimed part of the reimbursements will become taxable and will be paid after appropriate deduction of tax along with your salary for the month of March.
Please note that if you opt for these reimbursements, these respective amounts will be deducted from your salary on a monthly basis and will be paid only on a quarterly basis against bills submitted. In the absence of submission of bills during a quarter, the amount will be paid only in March. The above reimbursements, except Medical and Dress, would be made only after deducting 10% of the claim amount towards personal uses, and only 90% of the claims would be reimbursable to you.
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As per my calculation (if I opt for only LTA and the rest in monthly), this will be my monthly salary: 76,228.33 (Basic + Conveyance + Dress + Edu Allowance + Food Coupon + HRA + Fuel + OTHER ALLOWANCES + Telephone).
Regards.
From India, Bangalore
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1Understanding "Other Allowance"
In the offer letter, there is a component labeled "Other Allowance," and apart from that, there are five separate allowances as well. I don't understand what this "Other Allowance" is and what its breakdown is. My primary question is whether I will receive the below-mentioned "Other Allowance" in my monthly salary or not. Additionally, what are some hidden aspects that I should be careful about?
I don't know how to attach something here, so let me just paste it.
Salary Components
- **Basic:** Annual: 300,000 | Monthly: 25,000
- **Conveyance Allowance:** Annual: 9,600 | Monthly: 800
- **Dress Allowance:** Annual: 12,000 | Monthly: 1,000
- **Educational Allowance:** Annual: 2,400 | Monthly: 200
- **Bonus/Ex Gratia:** Annual: 8,400 | Monthly: 700
- **Food Coupons:** Annual: 36,000 | Monthly: 3,000
- **Gratuity:** Annual: 15,000 | Monthly: 1,250
- **HRA:** Annual: 150,000 | Monthly: 12,500
- **Variable:** Annual: 0 | Monthly: 0
- **Leave Travel Allowance:** Annual: 37,500 | Monthly: 3,125
- **Medical:** Annual: 15,000 | Monthly: 1,250
- **Fuel & Maintenance Allowance:** Annual: 39,600 | Monthly: 3,300
- **Other Allowances:** Annual: 335,140 | Monthly: 27,928.33
- **Employer Contribution to PF:** Annual: 9,360 | Monthly: 780
- **Telephone Allowance:** Annual: 30,000 | Monthly: 2,500
Total Annual: 1,000,000
*Annual Incentive: 100,000 (Please note Annual Incentive is separate and performance-based.)
Optional Allowances
Please note that you have an option to choose between:
1. Food Allowance
2. Medical Reimbursements
3. Dress Reimbursements
4. Leave Travel Assistance
5. Telephone Reimbursements
6. Fuel and Maintenance Reimbursements
Subject to the detailed rules in relation to each of these allowances, you can avail of any or all of these four tax-saving allowances. If you do not opt for any of these, the respective amounts will be taxable and be paid as part of "Other Allowances."
Food Allowance
Sodexho Coupons will be issued for Rs. 1,000/- or Rs. 2,500/- against Food Allowance for those who opt for the same. This will attract a 3% service charge. The amount deducted from your salary against food allowance is entirely non-taxable.
Reimbursements
Medical, Dress, Fuel, and Vehicle Maintenance reimbursement amounts will be non-taxable and will be paid on a quarterly basis against the appropriate enclosures/bills produced with appropriate forms duly filled. If bills are not produced during a quarter, this allowance gets carried forward to the next quarter. During the financial year, you have two more chances (2nd & 3rd quarter) to submit appropriate bills for reimbursement of the amount in a non-taxable manner. If bills of claim are not submitted until the last quarter (4th quarter) of a financial year, then the unclaimed part of the reimbursements will become taxable and will be paid after appropriate deduction of tax along with your salary for the month of March.
Please note that if you opt for these reimbursements, these respective amounts will be deducted from your salary on a monthly basis and will be paid only on a quarterly basis against bills submitted. In the absence of submission of bills during a quarter, the amount will be paid only in March. The above reimbursements, except Medical and Dress, would be made only after deducting 10% of the claim amount towards personal uses, and only 90% of the claims would be reimbursable to you.
-----------------------------------------------------------------------------------------------------------------------------
As per my calculation (if I opt for only LTA and the rest in monthly), this will be my monthly salary: 76,228.33 (Basic + Conveyance + Dress + Edu Allowance + Food Coupon + HRA + Fuel + OTHER ALLOWANCES + Telephone).
Regards.
From India, Bangalore
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Today, most companies offer excellent salary packages, and yours is one of them. The salary breakdown is designed to benefit you in terms of Income Tax. Some of these additional benefits can help you save on taxes. You have the option to choose these benefits for tax savings or select "other allowances."
However, if you opt for the above-mentioned benefits, you must ensure proper documentation as per the Act to avail the tax benefits. The choice is yours regarding what you would like to select.
It's important to note that only the annual incentives marked with a star require special attention. Otherwise, the above salary breakdown seems like a good choice.
Regards,
Arun J
From India, Hyderabad
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However, if you opt for the above-mentioned benefits, you must ensure proper documentation as per the Act to avail the tax benefits. The choice is yours regarding what you would like to select.
It's important to note that only the annual incentives marked with a star require special attention. Otherwise, the above salary breakdown seems like a good choice.
Regards,
Arun J
From India, Hyderabad
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