Please let me know what all should be the ideal components of the pay package in view of the introduction of the FBT ?
From India, Agartala
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From India, Agartala
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Hi,
My Finance team says Gift Vouchers and Food Coupons are to be taxed at 30%! Can someone clarify this, please? If it is a 30% tax, is your employer observing the tax, or does the employee need to bear the tax?
Sonali
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My Finance team says Gift Vouchers and Food Coupons are to be taxed at 30%! Can someone clarify this, please? If it is a 30% tax, is your employer observing the tax, or does the employee need to bear the tax?
Sonali
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From what I have understood from my finance division, the company will have to bear the tax for the Sodexo as we are providing it as a benefit for the employees.
The only thing that has been left out is medical reimbursement. So I guess we will have to start working on our old style of a straight package which did not have flexible benefits.
If anyone else comes across any other ways around this FBT, please do share this information with all of us here.
Regards,
Kavi
From India, Bangalore
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The only thing that has been left out is medical reimbursement. So I guess we will have to start working on our old style of a straight package which did not have flexible benefits.
If anyone else comes across any other ways around this FBT, please do share this information with all of us here.
Regards,
Kavi
From India, Bangalore
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hey how has the Fringe Benefit Tax finally affected HR policies of cos regarding Pay packages? Does the cash in hand for the employee increase? How are HR depts going about this?
From India, New Delhi
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From India, New Delhi
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To the best of my knowledge, Sodexo Passes are cleared by the Finance Ministry and will not be considered fringe, as they are considered as a food pass given in lieu of canteen facilities.
Off the record, a person working for Sodexo has informed me that it cost Sodexo approximately 5 crores to clear themselves from FBT as it had ruined their business completely. Chidambaram is definitely richer by a couple of crores for sure ;)
Cheers,
~MAVERICK~
From India, Pune
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Off the record, a person working for Sodexo has informed me that it cost Sodexo approximately 5 crores to clear themselves from FBT as it had ruined their business completely. Chidambaram is definitely richer by a couple of crores for sure ;)
Cheers,
~MAVERICK~
From India, Pune
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Hey Friends,
The best thing I would suggest regarding the flexi pack included in fringe benefits is to deduct the tax on it before paying. ;-) I know it sounds funny, but why should the company offer its employees the so-called benefits and also pay tax on it?
Shradha
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The best thing I would suggest regarding the flexi pack included in fringe benefits is to deduct the tax on it before paying. ;-) I know it sounds funny, but why should the company offer its employees the so-called benefits and also pay tax on it?
Shradha
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The major impact of FBT is quite clear.
If the company keeps giving benefits (computer rent, company-owned chauffeur/car, etc.), the company will have to pay another 30% over and above the actual cost as Tax.
If the company merges the same with the salary figures (stops giving benefits and increases the salary), the employee has to pay Income Tax on the same.
Result: Government is richer, while we are poorer.
The fact is most of the companies are now cutting off Fringe Benefits and are passing on cash to the employees in terms of a higher salary. (Our company has stopped giving computer rental and has merged the amount with the salary).
So employees beware, you will have to pay additional Income Tax.
Ajmal Mirza
mirza_ajmal@yahoo.com
From India, Ahmadabad
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35If the company keeps giving benefits (computer rent, company-owned chauffeur/car, etc.), the company will have to pay another 30% over and above the actual cost as Tax.
If the company merges the same with the salary figures (stops giving benefits and increases the salary), the employee has to pay Income Tax on the same.
Result: Government is richer, while we are poorer.
The fact is most of the companies are now cutting off Fringe Benefits and are passing on cash to the employees in terms of a higher salary. (Our company has stopped giving computer rental and has merged the amount with the salary).
So employees beware, you will have to pay additional Income Tax.
Ajmal Mirza
mirza_ajmal@yahoo.com
From India, Ahmadabad
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I think what you have said seems to be the best practice, i.e., to cut the tax before paying, which seems to be working out best for both of us (employee and employer). We are also currently following the same system. I would like to hear from fraternity members what their take is on this whole issue.
Cheers,
Kavi
From India, Bangalore
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Cheers,
Kavi
From India, Bangalore
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Hi all,
Regarding the FBT:
The Sodexo Meal voucher is out of the FBT, whereas the Sodexo Gift voucher still remains under FBT. I have been discussing with my friends in IT companies, and the conclusion is that most of the companies are moving away from flexible components.
However, I have a question - can we increase the Sodexo meal voucher limit?
Regards,
Anu
From India, Bangalore
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Regarding the FBT:
The Sodexo Meal voucher is out of the FBT, whereas the Sodexo Gift voucher still remains under FBT. I have been discussing with my friends in IT companies, and the conclusion is that most of the companies are moving away from flexible components.
However, I have a question - can we increase the Sodexo meal voucher limit?
Regards,
Anu
From India, Bangalore
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Hey, I just came across this file on Fringe Benefits from one of the group members, Rajiv Garg of , a HR group in yahoo. Hope this was of some use to you all. Regards, Soumya Shankar
From India, Bangalore
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From India, Bangalore
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Hi all,
Have just finished salary structuring post FBT exercise after consulting quite a few firms including the audit firm which is one of the top three in India.
The suggested changes are as follows-
Payroll:-
Basic
HRA – 50 % for 4 cities & 40 % for other towns, the exemption is available under IT act under three rules viz
HRA rules
Actual rent reciepts 15000
HRA as per the salary 12,415
Actual rent reciepts less ten pcet over Basic 12,517
Least of the three would be applicable for exemption for Tax under section 10 ( in the above case Rs 12,415)
Conveyance – Rs 800 / pm , this is to be excluded if the employee has been provided a company owned car or a leased car. In the case of latter the employee would be taxed for the perquisite.
Child Education allowance – Rs 100 /pm per child max upto 2 child viz Rs 200 per month.
If the employee has a child staying in a hostel then Rs 350/pm
If the company is promoter of educational institutional where the children of employees get the preference or admission then Rs 1000/ pm per child upto 2 children is exempted from tax.
Sodexho meal vouchers : Rs 1500 per month
Annuals
Medical Reimbursement : - Rs 15,000 p.a
Leave Travel allowance : not taxable if rules are followed under IT Act and also FBT has been not very clear on this issue.
PF Contribution: 12 % of the company’s contr
Additional Comments:
Many companies provide special allowance – which is fully taxable like basic but no exemption is available like basic whose 12% contribution provides the tax shield under section 88 which is maximum upto Rs 1 Lac only.
Cheerio
Rajat
From India, Pune
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Have just finished salary structuring post FBT exercise after consulting quite a few firms including the audit firm which is one of the top three in India.
The suggested changes are as follows-
Payroll:-
Basic
HRA – 50 % for 4 cities & 40 % for other towns, the exemption is available under IT act under three rules viz
HRA rules
Actual rent reciepts 15000
HRA as per the salary 12,415
Actual rent reciepts less ten pcet over Basic 12,517
Least of the three would be applicable for exemption for Tax under section 10 ( in the above case Rs 12,415)
Conveyance – Rs 800 / pm , this is to be excluded if the employee has been provided a company owned car or a leased car. In the case of latter the employee would be taxed for the perquisite.
Child Education allowance – Rs 100 /pm per child max upto 2 child viz Rs 200 per month.
If the employee has a child staying in a hostel then Rs 350/pm
If the company is promoter of educational institutional where the children of employees get the preference or admission then Rs 1000/ pm per child upto 2 children is exempted from tax.
Sodexho meal vouchers : Rs 1500 per month
Annuals
Medical Reimbursement : - Rs 15,000 p.a
Leave Travel allowance : not taxable if rules are followed under IT Act and also FBT has been not very clear on this issue.
PF Contribution: 12 % of the company’s contr
Additional Comments:
Many companies provide special allowance – which is fully taxable like basic but no exemption is available like basic whose 12% contribution provides the tax shield under section 88 which is maximum upto Rs 1 Lac only.
Cheerio
Rajat
From India, Pune
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Hi,
You can have the following components:
Basic - fully taxable
HRA - Partially taxable (subject to exemptions as Rajat mentioned)
Conveyance - Rs. 800/- p.m. or actual conveyance received, whichever is least. Please note that you can claim conveyance only for the workdays.
Medical - Unlike conveyance, you are eligible for Rs 15,000/- per annum against medical reimbursements.
LTA - can claim twice in a block of two years
Sodexo - Please note that there is no ceiling on this. The Finance Act has conveniently forgotten about this, and reading between the lines, the employee can be paid any amount of food coupons. But, considering the utility, employees settle down to their convenience.
Company Leased accommodation - Now this is 20% of non-perq salary and not sensible to accept for this facility.
The balance amount can be paid as a special allowance.
Still, the employee benefits because instead of paying 33.66%, he will be paying only 6.732%.
FBT is a welcoming trend for organizations to streamline their books of accounts. Let us see how our people are to manage this.
Regarding chapter VIA exemptions, employers are now reluctant to consider for section 192, following the stringent regulations from CBDT.
Thanks,
Hema
From India,
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You can have the following components:
Basic - fully taxable
HRA - Partially taxable (subject to exemptions as Rajat mentioned)
Conveyance - Rs. 800/- p.m. or actual conveyance received, whichever is least. Please note that you can claim conveyance only for the workdays.
Medical - Unlike conveyance, you are eligible for Rs 15,000/- per annum against medical reimbursements.
LTA - can claim twice in a block of two years
Sodexo - Please note that there is no ceiling on this. The Finance Act has conveniently forgotten about this, and reading between the lines, the employee can be paid any amount of food coupons. But, considering the utility, employees settle down to their convenience.
Company Leased accommodation - Now this is 20% of non-perq salary and not sensible to accept for this facility.
The balance amount can be paid as a special allowance.
Still, the employee benefits because instead of paying 33.66%, he will be paying only 6.732%.
FBT is a welcoming trend for organizations to streamline their books of accounts. Let us see how our people are to manage this.
Regarding chapter VIA exemptions, employers are now reluctant to consider for section 192, following the stringent regulations from CBDT.
Thanks,
Hema
From India,
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It may not be exactly ideal but helps in the reduction of the tax burden.
Basic DA HRA 40% of the Basic + DA (Can be claimed as an exemption in the case of Rental) Education Allowance 200 per month Transport Allowance 800 per month Special Allowance (Taxable) Medical Reimbursement 15,000 per annum Food Coupons (Food Vouchers) 15,600 per annum (1,300 per month) Annual Gift Voucher Rs 5,000 per annum LTA (taxable once in two years)
Regards, Srinivasu
From India, Hyderabad
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Basic DA HRA 40% of the Basic + DA (Can be claimed as an exemption in the case of Rental) Education Allowance 200 per month Transport Allowance 800 per month Special Allowance (Taxable) Medical Reimbursement 15,000 per annum Food Coupons (Food Vouchers) 15,600 per annum (1,300 per month) Annual Gift Voucher Rs 5,000 per annum LTA (taxable once in two years)
Regards, Srinivasu
From India, Hyderabad
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Hi i am a student..want to know bout the basics of FBT. Will FBT be applicable to all the benefits that are provided to an employee or THERE IS SOME CLAUSE.. CHEERS!
From India, Mumbai
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From India, Mumbai
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Hi All, Please clarify, Is Medical Reimbursement also included in FBT. Is it also taxed? :?: Regads, Gunjan
From India, New Delhi
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From India, New Delhi
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SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx