Resp. Seniors,
Since the last year, I have been working in a reputed auto component unit operating from NCR. In the hierarchy, I fall under middle management and head the unit HR department.
Here, as per the salary structure, every penny of the salary component is considered for calculating TDS as nothing is paid in reimbursement form through vouchers, etc., as it is being paid by other companies.
Due to the above abnormality, a huge TDS is imposed on each white-collar employee every month.
Can I request you to suggest a few salary components that do not attract TDS?
Kindly guide,
From India, Pondicherry
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2Since the last year, I have been working in a reputed auto component unit operating from NCR. In the hierarchy, I fall under middle management and head the unit HR department.
Here, as per the salary structure, every penny of the salary component is considered for calculating TDS as nothing is paid in reimbursement form through vouchers, etc., as it is being paid by other companies.
Due to the above abnormality, a huge TDS is imposed on each white-collar employee every month.
Can I request you to suggest a few salary components that do not attract TDS?
Kindly guide,
From India, Pondicherry
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some tax saving components like HRA, Food coupons, Medical Assistance, Conveyance allowance, Gift vouchers, Child Edu allowance, etc are available. Pon
From India, Lucknow
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From India, Lucknow
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Hi Panjit,
There are some salary components that can be used to save tax for employees. Salary structure differs from organization to organization. Below are some components that are commonly used in industries:
1) HRA - Maximum 50% of Basic can be exempted from tax on submission of rent receipt.
2) Conv. Allowance - 800/- per month is exempted from tax.
3) Telephone Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. Fully exempted from tax on submission of bills. Note: all employees should declare that calls were purely made for official purposes only.
4) Training Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. As per government guidelines, the course or training shall be useful in company profit and growth. Training Reimbursement should not be exempted on periodic journals and the training courses that are a benefit to the employee only. Fully exempted from tax on submission of bills only in case the training course is useful for company profit and growth.
5) Sodexo Meal Coupons - Part of Flexible Basket. A maximum of 50/- Rs. per meal is exempted from tax.
6) Car Fuel - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer), and purpose of travel. Car Fuel attracts perquisites, so should be carefully implemented. An employee can only take either Conv Allowance or Car Fuel. Both cannot be availed at the same time.
7) Driver Salary - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer), and purpose of travel. Driver Salary attracts perquisites, so should be carefully implemented. Employees availing Conv Allowance should not be allowed to take the benefit of Driver Salary exemption.
8) Sodexo Gift Vouchers - Part of Flexible Basket. A maximum of 5000/- per year is exempted from tax.
9) Medical Reimbursement - Part of Flexible Basket. A maximum of 1250/- per month is exempted from tax on submission of bills.
10) LTA Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. Fully exempted from tax on submission of bills (Only twice in a four-year block).
Regards,
Kumar Anand
HR - SAMSUNG
From Korea
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There are some salary components that can be used to save tax for employees. Salary structure differs from organization to organization. Below are some components that are commonly used in industries:
1) HRA - Maximum 50% of Basic can be exempted from tax on submission of rent receipt.
2) Conv. Allowance - 800/- per month is exempted from tax.
3) Telephone Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. Fully exempted from tax on submission of bills. Note: all employees should declare that calls were purely made for official purposes only.
4) Training Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. As per government guidelines, the course or training shall be useful in company profit and growth. Training Reimbursement should not be exempted on periodic journals and the training courses that are a benefit to the employee only. Fully exempted from tax on submission of bills only in case the training course is useful for company profit and growth.
5) Sodexo Meal Coupons - Part of Flexible Basket. A maximum of 50/- Rs. per meal is exempted from tax.
6) Car Fuel - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer), and purpose of travel. Car Fuel attracts perquisites, so should be carefully implemented. An employee can only take either Conv Allowance or Car Fuel. Both cannot be availed at the same time.
7) Driver Salary - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer), and purpose of travel. Driver Salary attracts perquisites, so should be carefully implemented. Employees availing Conv Allowance should not be allowed to take the benefit of Driver Salary exemption.
8) Sodexo Gift Vouchers - Part of Flexible Basket. A maximum of 5000/- per year is exempted from tax.
9) Medical Reimbursement - Part of Flexible Basket. A maximum of 1250/- per month is exempted from tax on submission of bills.
10) LTA Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by the government; however, there should be one firm policy, and the limits per month should be derived as per the employee's grade and designation. Fully exempted from tax on submission of bills (Only twice in a four-year block).
Regards,
Kumar Anand
HR - SAMSUNG
From Korea
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Hi Kumar,
Thank you very much for providing such useful information.
Can you please explain how to fix the salary computations - flexi benefits (Telephone Reimbursements, Conveyance Allowance, Training Allowance, Attire Allowance)? Our employees are concerned about TDS deductions from their salary. They have been requesting Flexi Benefits. Therefore, I would like to request your guidance on how to structure their salary in terms of Flexi Benefits.
Thank you.
From India, Hyderabad
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Thank you very much for providing such useful information.
Can you please explain how to fix the salary computations - flexi benefits (Telephone Reimbursements, Conveyance Allowance, Training Allowance, Attire Allowance)? Our employees are concerned about TDS deductions from their salary. They have been requesting Flexi Benefits. Therefore, I would like to request your guidance on how to structure their salary in terms of Flexi Benefits.
Thank you.
From India, Hyderabad
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Dear Shree Kumar Anand, HR - SAMSUNG,
Medical Reimbursement is part of the Flexible Basket. A maximum of Rs. 1,250 per month is exempted from tax on submission of bills.
Isn't it "a maximum of Rs. 15,000 per year"?
Thank you.
From India, Vadodara
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Medical Reimbursement is part of the Flexible Basket. A maximum of Rs. 1,250 per month is exempted from tax on submission of bills.
Isn't it "a maximum of Rs. 15,000 per year"?
Thank you.
From India, Vadodara
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We all know the numbers on the CTC (Cost To Company)but the take home is vastly different. This is mostly due to one single component- Taxes. Taxes are applicable on most aspects of our salary. There are limited ways we can save on taxes by way of deductions- Most used sections under the IT Act, 1961 are- 80C, 80D, 80G and Sec 24.
A few components which can be used to reduce the tax liability on our salary income:-
Allowances/ Reimbursements- Allowances are normally paid irrespective of the employee actually incurring them. These are fully taxable if no bills are provided. However, if the expenses are incurred actually and bills provided, they are not taxable up to a specified limit under each head.
Conveyance: For conveyance, up to Rs.800 per month is allowed as deduction without providing any bills.
Medical Allowance: Bills have to be provided; up to Rs.15,000 per annum is allowed as deduction. This can be claimed for self, spouse, children, parents and siblings who are dependent on the assessee.
Leave and Travel Allowance:2 trips in a block of 4 years is allowed and only travel within India can be claimed as deduction. So unfortunately you won't be able to claim for those Myrtle beach flights! It can be claimed for self, spouse, children, parents but only if the employee (assessee) is travelling along with them. There is no maximum limit on this, but the unutilized amount will be paid once the block is completed (after deducting taxes).
Education Allowance: An amount of up to Rs.2,400 per annum is tax-free.
Qualification Allowance: An amount of Rs.24,000 per annum is tax-free.
Training Allowance: An amount of up to Rs.14,000 per annum is tax-free if the employee provides relevant bills.
Telephone Allowance: An amount of Rs.12,000 per annum is tax free if the phone is used for official purposes and bills submitted.
HRA: House Rent Allowance can be claimed if one lives in a rented premises and the rent exceeds 10% of the salary.
The actual HRA exempted from tax is least of the following:
The actual amount of HRA received.
40% of salary. This increases to 50% if you are renting out the house in Delhi, Mumbai, Chennai or Kolkata
Rent paid minus 10% of salary (basic component + dearness allowance)
Salary for the purpose of HRA means: Basic + D.A (only if it is forming part of salary for retirement benefits) + commission (if it’s a fixed % of sales turnover).
All the best
<link outdated-removed> ( Search On Cite | Search On Google )
From India, Vijayawada
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A few components which can be used to reduce the tax liability on our salary income:-
Allowances/ Reimbursements- Allowances are normally paid irrespective of the employee actually incurring them. These are fully taxable if no bills are provided. However, if the expenses are incurred actually and bills provided, they are not taxable up to a specified limit under each head.
Conveyance: For conveyance, up to Rs.800 per month is allowed as deduction without providing any bills.
Medical Allowance: Bills have to be provided; up to Rs.15,000 per annum is allowed as deduction. This can be claimed for self, spouse, children, parents and siblings who are dependent on the assessee.
Leave and Travel Allowance:2 trips in a block of 4 years is allowed and only travel within India can be claimed as deduction. So unfortunately you won't be able to claim for those Myrtle beach flights! It can be claimed for self, spouse, children, parents but only if the employee (assessee) is travelling along with them. There is no maximum limit on this, but the unutilized amount will be paid once the block is completed (after deducting taxes).
Education Allowance: An amount of up to Rs.2,400 per annum is tax-free.
Qualification Allowance: An amount of Rs.24,000 per annum is tax-free.
Training Allowance: An amount of up to Rs.14,000 per annum is tax-free if the employee provides relevant bills.
Telephone Allowance: An amount of Rs.12,000 per annum is tax free if the phone is used for official purposes and bills submitted.
HRA: House Rent Allowance can be claimed if one lives in a rented premises and the rent exceeds 10% of the salary.
The actual HRA exempted from tax is least of the following:
The actual amount of HRA received.
40% of salary. This increases to 50% if you are renting out the house in Delhi, Mumbai, Chennai or Kolkata
Rent paid minus 10% of salary (basic component + dearness allowance)
Salary for the purpose of HRA means: Basic + D.A (only if it is forming part of salary for retirement benefits) + commission (if it’s a fixed % of sales turnover).
All the best
<link outdated-removed> ( Search On Cite | Search On Google )
From India, Vijayawada
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Dear,
You can consider Uniform Allowance (without any bills required to claim) in the Salary Breakup as it is 100% exempted from TDS/Income Tax norms. You can check with your CA as well. All other benefits like Sodexo Passes are covered under FBT.
All the very best,
Satyam
From India, New Delhi
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You can consider Uniform Allowance (without any bills required to claim) in the Salary Breakup as it is 100% exempted from TDS/Income Tax norms. You can check with your CA as well. All other benefits like Sodexo Passes are covered under FBT.
All the very best,
Satyam
From India, New Delhi
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SORRY, BUT HERE IT IS CALCULATED DIFFERENTLY, I SUPPOSE. IT IS A PER ANNUM CEILING and NOT divided by 12 Per Month ceiling and that IS different NOT THE SAME
From India, Vadodara
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From India, Vadodara
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Yes, true but CEILING and ELIGIBILITY are two different words. In my above post, I was talking about the eligibility part. The 1,250/- per month eligibility will be accrued to a value of 15,000/- per annum, and that is the maximum exemption (CEILING) in any FY.
In the case of carry forward of Medical Reimbursement, this eligibility gets added month-wise, but the CEILING of 15,000/- remains as it is.
Rgds..Kumar Anand HR-SAMSUNG
From Korea
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In the case of carry forward of Medical Reimbursement, this eligibility gets added month-wise, but the CEILING of 15,000/- remains as it is.
Rgds..Kumar Anand HR-SAMSUNG
From Korea
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