Dear John,
There are some salary components that can be used to save tax for employees. Salary structure differs from organisation to organisation. Below are some components that are commonly used in industries.
1) HRA - Maximum 50% of Basic can be exempted from tax on submission of rent reciept
2) Conv. Allowance - 800/- per month is exempted from tax
3) Telephone Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by Govt, however there should be one firm policy and the limits per month should be derived as per employee's grade and designation. Fully exempted from tax on submission of bills. Note all employee should declare that calls were purely made for official purposes only.
4) Training Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by Govt, however there should be one firm policy and the limits per month should be derived as per employee's grade and designation. As per govt guideline the course or training shall be useful in company profit and growth. Training Reimbursement should not be exempted on periodic journals and the training courses that is a benefit to employee only. Fully exempted from tax on submission of bills only in case the training course is useful for company profit and growth.
5) Sodexo Meal Coupons - Part of Flexible Basket. A maximum of 50/- Rs. per meal is exempted from tax.
6) Car Fuel - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer) and purpose of travel. Car Fuel attracts perquisites, so should be carefully implemented. An employee can only take either Conv Allowance or Car Fuel. Both can not be availed at same time.
7) Driver Salary - Part of Flexible Basket. Exempted from tax on submission of bills and depends on CC of car, Owner of car (Employee or Employer) and purpose of travel. Driver Salary attracts perquisites, so should be carefully implemented. Employees availing Conv Allowance should not be allowed to take the benefit of Driver Salary exemption.
8) Sodexo Gift Vouchers - Part of Flexible Basket. A maximum of 5000/- per year is exempted from tax.
9) Medical Reimbursement - Part of Flexible Basket. A maximum of 1250/- per month is exempted from tax on submission of bills.
10) LTA Reimbursement - Part of Flexible Basket. There is no upper limit prescribed by Govt, however there should be one firm policy and the limits per month should be derived as per employee's grade and designation. Fully exempted from tax on submission of bills (Only twice in a four year block).
AK Jain