How Can I Optimize My Flexi-Pay Salary Structure to Save on Taxes?

Hi, recently, my company has decided to adopt a flexi-pay salary structure wherein I can decide the break-up of my salary. Components falling under flexi-pay are:

a) LTA - limit - 0-40000/-
b) HRA - limit - 60% of PF base salary

My salary is > 8 Lakhs. Please suggest what changes I should make to save tax.

Regards,
Bhaumik

Hi Bhaumik, The limit for HRA is 50% of basic for metros and 40% for non-metros for IT exemption. Opt for the following tax-saving components:

1. Food coupons - Rs. 2700/- per month (fully tax-free).
2. Child Education Allowance - Rs. 100/- per month per child (maximum 2 children).
3. Conveyance allowance - Rs. 800/- per month. If you use your own 2-wheeler for official purposes, Rs. 5000/- per month for fuel and maintenance charges. If you use your own 4-wheeler for official purposes, Rs. 20,000/- per month for fuel and maintenance charges. If you opt for fuel and maintenance charges, the conveyance allowance does not apply. Fuel and maintenance charges are tax-exempted.
4. Gift vouchers - Rs. 5000/- per annum fully tax-exempted.
5. If you are a member of any club, opt for a club allowance up to the limit of Rs. 1.5 lakh per annum tax-exempted.
6. Medical assistance - Rs. 15,000/- per annum (tax-free subject to the production of bills).

Hope this helps! Let me know if you need further assistance.

If you opt for a food coupon and your company provides you with a cafeteria facility, and you choose to have food in the cafeteria, then some part of it will be included in your tax calculations.

Hi Pon, I would like to have supporting documentation stating that fuel charges can be tax-free up to 20,000/-.

Regards, Nirav Shah