We are an organization of 150 employees and are covered under shops & establishment act under Maharashtra Government. I want to incorporate Petrol allowance in the salary structure Pls guide me as to what is the upper limit for tax exemption & if its applicable for the organizations included under Shops & establishment act. Also what is the likely percentage of tax that would be paid by the oragnization for this fringe benefit. Pls help
From India, Mumbai
From India, Mumbai
Hi Priyanka
Petrol allowance will be treated as conveyance allowance and as oer IT act, same is tax free to the extent of Rs 800/-.anything above that will attract tax.
This is applicable to all the companies regardless of whether they are covered under Shop/Est act or not
trust this answers ur query...if u still hve any doubts, plz write to me
rgds
niks
From India, Mumbai
14Petrol allowance will be treated as conveyance allowance and as oer IT act, same is tax free to the extent of Rs 800/-.anything above that will attract tax.
This is applicable to all the companies regardless of whether they are covered under Shop/Est act or not
trust this answers ur query...if u still hve any doubts, plz write to me
rgds
niks
From India, Mumbai
Thanks Nikky, However, I have heard there is no upper limit to the exemption and is a sort of fringe benefit. Fuel Allowance gives an exemption depending upon the limit decided by the Mgmnt. Being a fringe benefit, a small percentage of tax would be levied as a tax to the company.
I am sure about travel allowance gets an exemption of at the most Rs 800 & its very different from fuel/petrol allowance
Pls guide
From India, Mumbai
I am sure about travel allowance gets an exemption of at the most Rs 800 & its very different from fuel/petrol allowance
Pls guide
From India, Mumbai
If you pay to your employees Petrol Reimbursement against the bills than it is non taxable for the employees but it extract to FBT for the company. 20% of the expenses deemed to be Fringe Benefit & the flat rate of FBT on Conveyance/Petrol Reimbursement is 30%.
If you pay to your employees without bills than only Rs. 800/- per month is non-taxable.
Hope this clarifies your doubts....
From India, Mumbai
If you pay to your employees without bills than only Rs. 800/- per month is non-taxable.
Hope this clarifies your doubts....
From India, Mumbai
Replies above technically answer the query. However, few more points:
Rs 800/- per month doesn't attract ANY tax whether from employee or employer; no proof of expenses is required.
Reimbursement of fuel, Maintenance expenses and Driver's salary attract FBT (30% on 20% plus service tax i.e. 6.7%) from employer. Employer can choose to pass this onto employee - who will benefit as otherwise he'll get it taxed at 30% plus or whichever tax bracket he falls in. For employees in less than 1.5 lakh TAXABLE SALARY bracket, this reimbursement should be avoided as he can avoid the least tax as well.
Besides, can someone comment whether expense incurred on conveyance like auto, taxis for own commute to office or personal commute is also subject to FBT? and at same rate? In such a case, these bills can be allowed by organisation under this head.
PS: Can citeHR also have a "Justify" button in text box.
From India
Organisation can allow for auto, taxies, etc., however, I am interested to know whether this is allowed under I.Tax act ?? If someone is not having his own vehicle & produce conveyance voucher with Taxi, auto charges, etc., for which no bills can be available....whether this is also acceptable under I.T. act...!!!!! company can pay FBT & recover from employees.
From India, Mumbai
From India, Mumbai
Dear Priyanka, Pls refer the attached file for your ref, hope you will get all the details with regard to the Tax exemption Thanks & Regards, GARAJ
From India, Mumbai
From India, Mumbai
it wil be better if u pay same as petrol reimbursement,there is no limit as such employee will get 100% tax benifit (subject employee submiting billfor claming same, employer have to pay around 6.8% as fbt on same)and will be benificial for those whose annual income is more than 1.8L/annum.If u want to include it as a part of salary then better name it conveyance allowance which is exempted upto 800/month.Further if u want urs employee to pay Fbt then u have to take writen consent to this effect from the employee.
From India, Delhi
From India, Delhi
Apart of the above reply in FBT allowance can be restructure of salary component of FBT like: petrol allowance & maintc allowance, Meals & entertainment allowance, Telephone, Vacation & Attire which employee need to pay FBT tax @6.7% and employer are required to issue a letter new salary structure component which to be stated FBT amount in total CTC...
as conveyance allowance can be paid 800/- per month tax free...
Regards
Hasnain
From India, Delhi
as conveyance allowance can be paid 800/- per month tax free...
Regards
Hasnain
From India, Delhi
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