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
101Have 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
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 work days.
Medical - Unlike conveyance, you are eligible for Rs15000/- per annum against medical reimbursements.
LTA - can claim twice in a block of two years
Sodexho - Please note that there is no ceiling on this. 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 own convenience.
Company Leased accomodation - Now this is 20% of non-perq salary and not sensible to accept for this facility.
The balance amount can be paid as 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 Organisations to stream line 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,
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 work days.
Medical - Unlike conveyance, you are eligible for Rs15000/- per annum against medical reimbursements.
LTA - can claim twice in a block of two years
Sodexho - Please note that there is no ceiling on this. 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 own convenience.
Company Leased accomodation - Now this is 20% of non-perq salary and not sensible to accept for this facility.
The balance amount can be paid as 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 Organisations to stream line 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,
It may not be exactly ideal but helps in reduction of tax burden
Basic
DA
HRA 40% of the Basic + DA (Can be claimed exemption in case of Rental)
Edn Allowance 200 per month
Transport Allowance 800 per month
SPecial Allowance (Taxable)
Medical Reimbursement 15000 per annum
Food Coupons (Food Vouchers) 15600 per annum (1300 per month)
Annual Gift Voucer Rs 5000 per annum
LTA (taxable once in two years)
regards
Srinivasu
From India, Hyderabad
Basic
DA
HRA 40% of the Basic + DA (Can be claimed exemption in case of Rental)
Edn Allowance 200 per month
Transport Allowance 800 per month
SPecial Allowance (Taxable)
Medical Reimbursement 15000 per annum
Food Coupons (Food Vouchers) 15600 per annum (1300 per month)
Annual Gift Voucer Rs 5000 per annum
LTA (taxable once in two years)
regards
Srinivasu
From India, Hyderabad
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
From India, Mumbai
FBT doesnt affect the salary as such. But the fringe benefits like club membership, telephone, tours, lunch coupons etc would be taxed. The tax would be payable by the employer.
It is aimed at taxing the indirect benefits extended by the employer to the employee which were so far out of the tax net
Niranjan
From India, Madras
It is aimed at taxing the indirect benefits extended by the employer to the employee which were so far out of the tax net
Niranjan
From India, Madras
Hi All, Please clarify, Is Medical Reimbursement also included in FBT. Is it also taxed? :?: Regads, Gunjan
From India, New Delhi
From India, New Delhi
Dear Gunjan, Greetings! Medical Reimbursement is not part of FBT. As Medical Reimbursement is medical facility to employee and his/her dependent in lieu of ESIC benefit. Thanks & Rgds
From India, Delhi
From India, Delhi
Thanks for your article help me improve my knowledge by reading your informative article. Well written and great job. Hold it up. Thanks!
infected days
infected days
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