Need information on FBT - pls help

Hello

I would like to request for some guidance from your side.

In our company (IT & ITES), we are in the process of revising our employee's salary structures so that their net take home salary goes high (I am talking only about revision in structure and not the salary ). Can you please suggest me some ways to save taxes or add certain reimbursement components to our salary. In that case company has to pay FBT on it but most of the employee's are ready to pay it from their pocket if they get some good tax savings out of it. In that situation this FBT can be added to their CTC.

At present our salary structure is very simple and straight forward and an employee with Rs. 10 lakh annual salary takes home only 7 lakh Rupees (30% Income Tax), I am giving here the sample salary structure of an employee who has Rs. 12 lakh P.A. salary so that you can go through it and suggest something.

Particulars Amount (Rupees)
Basic Salary 40000
PF (Employer's Contribution) 4800
House Rent Allowance (HRA) 16000
Special Allowance 36150
Conveyance 800
LTA 1000
Medical Allowance 1250
Total CTC(Per Month) 100000


If you can give me your valuable inputs on this, I will be highly obliged.

Regards

Deepak

Great Information Sir.

Thank you very much.

Regards,

Deepak

Dear Deepak,

You give the revised salary as reimbursement on the following head:

1. Books
2. Prof. Development
3. Petrol
4. Driver's Salary Reimbursement
5. Meals etc.,

and deduct 6.798% on the reimbursement as FBT from the hands of employee. In this method (30-6.79 employee can save 23.202% tax and employer also cannot pay FBT out of their pocket.

Before doing this kindly check with your auditor or superior.

Regards
S.Balakrishnan

Dear Sir

In this situation when employer is not ready to pay FBT from his own pocket, who will pay it? If employer deducts these charges from Employee's salary and pays then under what head he shows that deduction in salary slip? Is this kind of deduction is legally allowed?

Please guide

Regards

Deepak

Dear Deepak,

Reduce the amount of allowance by the tax amount.

For Example if book reimbursement allowance is Rs 100/ pm, and the FBT on it Rs 7/ . The allowance shown in the slip will be Rs 93. The balance Rs 7/ will be deposited as FBT.

OR

IN the letter you can mention that the above allowance will be paid subject to deduction of Tax. Then show the tax in the salary slip.

Nitin

Hi,

Pl. find some important information on FBT. Before we go and implement this benefit for employees, it is very important to know the background and how it works.

Pl. go through the attach file.

Regards,

Makarand Kotalwar

Attached Files

fringe_benefit_tax_241.doc (45.0 KB, 184 views)

you may use this excel spreadsheet as ref note on the components used..... just update the ctc figure in the last cell and update the basic rest all is defined...you may alter this as per your requirements


regards
pankaj

Attached Files

breakup_sheet_163.xls (26.0 KB, 116 views)

Thank you very much everybody, for your great help.

Regards

Deepak