Hi everyone,
I need to do salary restructuring and introduce non-taxable salary heads. Can anyone suggest how to introduce such heads that will help in salary restructuring from a tax benefit point of view? We already have HRA, medical, conveyance, and LTA in our salary structure.
Alternatively, can anybody help me with details of tax consultants who could assist in designing salary packages for tax benefits for high-salaried employees with higher tax liability?
Regards,
Priya
From India, Mumbai
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1I need to do salary restructuring and introduce non-taxable salary heads. Can anyone suggest how to introduce such heads that will help in salary restructuring from a tax benefit point of view? We already have HRA, medical, conveyance, and LTA in our salary structure.
Alternatively, can anybody help me with details of tax consultants who could assist in designing salary packages for tax benefits for high-salaried employees with higher tax liability?
Regards,
Priya
From India, Mumbai
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Hi Priya,
Under the non-taxable category, you can include Sodexo Coupons. These coupons are well-received by employees as they enable them to purchase meals and groceries. You can distribute them based on the employee's grade:
- Junior Level: Sodexo Vouchers worth Rs 500 per month
- Middle Level: Rs 750
- High Level: Rs 1000, and so forth
Many companies are already utilizing these vouchers. For further inquiries, please visit http://www.sodexo.co.in.
Feel free to reach out to me at
for any clarifications.
Thank you.
From India, Hyderabad
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Under the non-taxable category, you can include Sodexo Coupons. These coupons are well-received by employees as they enable them to purchase meals and groceries. You can distribute them based on the employee's grade:
- Junior Level: Sodexo Vouchers worth Rs 500 per month
- Middle Level: Rs 750
- High Level: Rs 1000, and so forth
Many companies are already utilizing these vouchers. For further inquiries, please visit http://www.sodexo.co.in.
Feel free to reach out to me at
Thank you.
From India, Hyderabad
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Hello,
Sodexo is an option, but the administration of Sodexo's can become a real pain in big organizations. Every month, it becomes a repetitive process. If we have administrative help, then it is a good option.
Does anyone have any ideas on introducing fringe benefits to reduce the tax burden on employees? Please send in any information you may have.
Regards,
Nidhi
From India, Gurgaon
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Sodexo is an option, but the administration of Sodexo's can become a real pain in big organizations. Every month, it becomes a repetitive process. If we have administrative help, then it is a good option.
Does anyone have any ideas on introducing fringe benefits to reduce the tax burden on employees? Please send in any information you may have.
Regards,
Nidhi
From India, Gurgaon
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Hi!!! Priyashiva
I hope this helps u....I think a list of partially exempt allowances will make it a little easy 4u 2understand how to go about it coz it did help me when I was working on the salary structure of my organization.....I do have a list of fully taxable allowances if u need I'll post it....
Regards
Himani
PARTIALLY EXEMPT ALLOWANCES
This category includes allowances which are exempt upto certain limit. For certain allowances, exemption is dependent on amount of allowance spent for the purpose for which it was received and for other allowances, there is a fixed limit of exemption.
(i) House Rent Allowance (H.R.A.)
An allowance granted to a person by his employer to meet expenditure incurred on payment of rent in respect of residential accommodation occupied by him is exempt from tax to the extent of least of the following three amounts:
a) House Rent Allowance actually received by the assesses
b) Excess of rent paid by the assesses over 10% of salary due to him
c) An amount equal to 50% of salary due to assesses (If accommodation is situated in Mumbai, Kolkata, Delhi, and Chennai)
‘Or' an amount equal to 40% of salary (if accommodation is situated in any other place).
Salary for this purpose includes Basic Salary, Dearness Allowance (if it forms part of salary for the purpose of retirement benefits) ,Commission based on fixed percentage of turnover achieved by the employee.
The exemption of HRA depends upon the following factors:
(1) Basic Salary (3) Rent paid
(2) Place of residence (4) HRA received
Section 16 (ii).
(i) Special Allowances for meeting official expenditure
Certain allowances are given to the employees to meet expenses incurred exclusively in performance of official duties and hence are exempt to the extent actually incurred for the purpose for which it is given. These include traveling allowance, daily allowance, conveyance allowance, helper allowance, research allowance and uniform allowance.
(ii) Special Allowances to meet personal expenses
There are certain allowances given to the employees for specific personal purposes and the amount of exemption is fixed i.e. not dependent on actual expenditure incurred in this regard. These allowances include:
a) Children Education Allowance
This allowance is exempt to the extent of Rs.100 per month per child for maximum of 2 children (grand children are not considered).
b) Children Hostel Allowance
Any allowance granted to an employee to meet the hostel expenditure on his child is exempt to the extent of Rs.300 per month per child for maximum of 2 children.
c) Transport Allowance
This allowance is generally given to government employees to compensate the cost incurred in commuting between place of residence and place of work. An amount uptoRs.800 per month paid is exempt. However, in case of blind and orthopaedically handicapped persons, it is exempt up to Rs.1600p.m.
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I hope this helps u....I think a list of partially exempt allowances will make it a little easy 4u 2understand how to go about it coz it did help me when I was working on the salary structure of my organization.....I do have a list of fully taxable allowances if u need I'll post it....
Regards
Himani
PARTIALLY EXEMPT ALLOWANCES
This category includes allowances which are exempt upto certain limit. For certain allowances, exemption is dependent on amount of allowance spent for the purpose for which it was received and for other allowances, there is a fixed limit of exemption.
(i) House Rent Allowance (H.R.A.)
An allowance granted to a person by his employer to meet expenditure incurred on payment of rent in respect of residential accommodation occupied by him is exempt from tax to the extent of least of the following three amounts:
a) House Rent Allowance actually received by the assesses
b) Excess of rent paid by the assesses over 10% of salary due to him
c) An amount equal to 50% of salary due to assesses (If accommodation is situated in Mumbai, Kolkata, Delhi, and Chennai)
‘Or' an amount equal to 40% of salary (if accommodation is situated in any other place).
Salary for this purpose includes Basic Salary, Dearness Allowance (if it forms part of salary for the purpose of retirement benefits) ,Commission based on fixed percentage of turnover achieved by the employee.
The exemption of HRA depends upon the following factors:
(1) Basic Salary (3) Rent paid
(2) Place of residence (4) HRA received
Section 16 (ii).
(i) Special Allowances for meeting official expenditure
Certain allowances are given to the employees to meet expenses incurred exclusively in performance of official duties and hence are exempt to the extent actually incurred for the purpose for which it is given. These include traveling allowance, daily allowance, conveyance allowance, helper allowance, research allowance and uniform allowance.
(ii) Special Allowances to meet personal expenses
There are certain allowances given to the employees for specific personal purposes and the amount of exemption is fixed i.e. not dependent on actual expenditure incurred in this regard. These allowances include:
a) Children Education Allowance
This allowance is exempt to the extent of Rs.100 per month per child for maximum of 2 children (grand children are not considered).
b) Children Hostel Allowance
Any allowance granted to an employee to meet the hostel expenditure on his child is exempt to the extent of Rs.300 per month per child for maximum of 2 children.
c) Transport Allowance
This allowance is generally given to government employees to compensate the cost incurred in commuting between place of residence and place of work. An amount uptoRs.800 per month paid is exempt. However, in case of blind and orthopaedically handicapped persons, it is exempt up to Rs.1600p.m.
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(Fact Checked)-The user's reply contains accurate information regarding partially exempt allowances, including details about House Rent Allowance, special allowances for meeting official and personal expenses. The reply is informative and aligns with tax exemption rules. (1 Acknowledge point)
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Hello,
I just need to add to the last post. The various allowances mentioned under special allowance do not come under that sub-heading. Any amount in special allowance is a fully taxable component of the salary. Please note that special allowance is the balancing figure in the salary break-up.
Warm Regards,
Nidhi
From India, Gurgaon
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I just need to add to the last post. The various allowances mentioned under special allowance do not come under that sub-heading. Any amount in special allowance is a fully taxable component of the salary. Please note that special allowance is the balancing figure in the salary break-up.
Warm Regards,
Nidhi
From India, Gurgaon
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Hi Kirti,
You may check this, driver's salary and petrol reimbursement at a higher level is possible. I think there is also attire reimbursement. Any component routed from salary or introduced as a salary head becomes taxable income. If the company allows, you can introduce voucher payments. Instead of normal tax, one can do away with the introduction of such salary heads which attract fringe benefit tax, which is lower than the normal tax rate. However, for such salary heads where it attracts fringe benefit tax, it should be borne by the employee or else the company can bear it on the grounds of employee welfare.
Regards,
Priya
From India, Mumbai
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You may check this, driver's salary and petrol reimbursement at a higher level is possible. I think there is also attire reimbursement. Any component routed from salary or introduced as a salary head becomes taxable income. If the company allows, you can introduce voucher payments. Instead of normal tax, one can do away with the introduction of such salary heads which attract fringe benefit tax, which is lower than the normal tax rate. However, for such salary heads where it attracts fringe benefit tax, it should be borne by the employee or else the company can bear it on the grounds of employee welfare.
Regards,
Priya
From India, Mumbai
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Can FBT be borne by the employees? Like, I can introduce choice pay instead of a special allowance. The employees can then use these benefits according to their needs and tax benefits and pay the FBT themselves instead of paying income tax. So, a win-win situation for the employer as well as the employee?
From India, Madras
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From India, Madras
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Dear Priya,
Food coupons up to Rs. 1350/- per month are tax-free in the FY 2010-11. You can also consider gift vouchers worth Rs. 5000/- per annum, which are tax-free. Another option to explore is the Children's Hostel allowance of Rs. 300/- per child (maximum 2 children).
Regards,
R. Ponraj
From India, Lucknow
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Food coupons up to Rs. 1350/- per month are tax-free in the FY 2010-11. You can also consider gift vouchers worth Rs. 5000/- per annum, which are tax-free. Another option to explore is the Children's Hostel allowance of Rs. 300/- per child (maximum 2 children).
Regards,
R. Ponraj
From India, Lucknow
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Hi everyone I want to know all non taxable heads & taxable heads of salary for income tax Warm Regards Ujwala Ghadge
From India, Ahmadabad
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From India, Ahmadabad
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I am working in a small factory as an assistant manager. One of the biggest issues we face here is the breakdown of the salary structure. Initially, the basic salary is set at a very high level, and there is no clear format in place. I am seeking your assistance in resolving this situation. Additionally, I am looking to understand how to implement a subsistence allowance that would be non-taxable. Could you please advise on the percentage that can be allocated for the subsistence allowance?
From India, New Delhi
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From India, New Delhi
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(Fact Checked)-The suggestion to add Sodexo Coupons as a non-taxable head for salary restructuring is correct and can provide tax benefits. This aligns with tax laws and employee benefits practices. (1 Acknowledge point)