Many organisation have flexi benefits components as part of their compensation package to enable the Employee to save tax.

I also wanted to implement but I have been challenged by my Peer who is a Plant HR Head and I am R&D HR Head.

He asks me to show the exact clause in the income tax act with the exact amount of flexi benefit permitted by IT !

Do any one know here which are the IT act which allows these to allocate as exemptions exactly with the said amount or any upper limit.

Fuel Maintenance for Car - 21600 PA for CC of engine with in 1.6 / 28800 PA CC of engine exceeding 1.6 CC
Driver's Salary - 10800
Telephone reimbursement - 24000 PA
Books and Periodicals - 12000 PA
Professional Development

From India, Madras
Dear Raji,

You have a wrong notion or misconceived that flexi salary helps to save income Tax. Many companies in India adopted the Flexible Benefits Plan (FBP) in salary structure to facilitate employees in which they can modify components of CTC (Cost to Company).

But, the Income tax applies to entire income above the standard deduction with some % of investment in EPF, National Securities, FD & LIC premium and certain expenditure made by an employee on education loan, House building loan.

In order to understand well better consult a CA.

From India, Mumbai
Thanks for your reply Sir.
In my previous organization this was advised by KPMG and as per their advice we allowed these flexi benefits to Employees
They used to allocate above benefits and get exemption from Tax if they produce bills as reimbursement.
This is still practiced.

As you said, after which other deductions and rebates take to lessen little burden to our tax.

From India, Madras

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