Tax Relief Limits for Salaried Employees
Please educate me regarding the various limits available for tax relief for the following items for a salaried employee of an organization. Also, how can an employee avail these deductions while calculating their income tax amount to be filed? (Documents that need to be submitted)
Please let me know the non-taxable limit for:
- Child Education Allowance
- Medical Reimbursement receipts submitted
- Transport/Conv. Allowance
- LTA receipt submitted
- Food Coupons
- Periodical Journals
- Uniform/Dress Allowance
- Telephone Reimbursement receipts submitted
- Prof. Development receipts submitted
- Car Expenses Reimbursement receipts submitted
- Driver Salary receipts submitted
- Internet expense receipts submitted
Is Performance Incentive/Bonus taxed with Gross salary (clubbed) or separately?
Much obliged as always & awaiting your valuable responses.
Regards,
Roshini Arya
From India, Jalandhar
Acknowledge(0)
Amend(0)
Please educate me regarding the various limits available for tax relief for the following items for a salaried employee of an organization. Also, how can an employee avail these deductions while calculating their income tax amount to be filed? (Documents that need to be submitted)
Please let me know the non-taxable limit for:
- Child Education Allowance
- Medical Reimbursement receipts submitted
- Transport/Conv. Allowance
- LTA receipt submitted
- Food Coupons
- Periodical Journals
- Uniform/Dress Allowance
- Telephone Reimbursement receipts submitted
- Prof. Development receipts submitted
- Car Expenses Reimbursement receipts submitted
- Driver Salary receipts submitted
- Internet expense receipts submitted
Is Performance Incentive/Bonus taxed with Gross salary (clubbed) or separately?
Much obliged as always & awaiting your valuable responses.
Regards,
Roshini Arya
From India, Jalandhar
Acknowledge(0)Amend(0)
In regards to your query, kindly find the response below:
It is tax-exempted up to Rs. 100 per month per child and can be availed for a maximum of 2 children. If an employee has a child at a hostel, we can give Child Hostel Allowance. Tax exemption of Rs. 300 per month per child can be availed. I think school/hostel fee receipts are to be submitted as proof.
Medical bills - Bills from the hospital for any admissions, bills from doctors for any relevant examination, bills from the chemist for proper medications, etc., are to be submitted. It is either Rs. 1250 per month or Rs. 15,000 per annum. In the absence of the proper documents, the amount is fully taxable. Whatever amount your company gives as a medical allowance, the amount would be tax-exempted to the extent of the amount in the bill or Rs. 1250 per month (Rs. 15,000 per annum), whichever is lower.
Conveyance allowance is given to employees so that they can be reimbursed for the expenses they incur to come to the office from their home. An amount of Rs. 800 per month (i.e., Rs. 9,600 per annum) is tax-exempted, and no documents are required for this exemption. For physically challenged persons, this allowance is tax-exempted up to Rs. 1,600 per month (Rs. 19,200 per annum).
However, transport allowance is different and is given to employees who are going to another city for some office-related work. In such cases, we are to reimburse the expenses incurred by the employees on the tickets and hotel reservations on an actual basis. Usually, this is not a part of the salary and is paid as it incurs and is reimbursed. Relevant tickets and other bills are to be provided to claim reimbursement.
LTA is Leave Travel Allowance and is availed twice in a bracket of 4 years. The current bracket is 2011-14 (Kindly correct me if I am wrong). Usually availed in the 2nd and 4th year when the employee goes on a vacation with family. The LTA for employees is fixed based on the designation. Please note that LTA will not be paid every year but would be paid only once in two years. In order to claim LTA, employees will have to submit the tickets and other bills. The reimbursement policy is available on the net, kindly Google it.
If in case the person has not gone out on vacation and has not claimed it, and yet the company has paid the LTA amount to the employee, the full amount will be taxed. If the employee claims LTA based on bills, only the incurred amount would be reimbursed (hence exempted to that extent) or would be reimbursed on the above limit said by the policies.
Now there is a difference between food allowance and food coupons. Food allowances are tax-exempted to one meal and two teas, i.e., a lump sum of Rs. 50 a day, i.e., around Rs. 1,300 per month (assuming 26 working days) payable only for working days. Food coupons or meal vouchers, however, are fully tax-exempted.
This is a non-taxable allowance if you are required to wear a uniform to work and receive an allowance to cover its cost, or if you are provided with a uniform. This exemption only applies where the uniform is clearly distinguishable from ordinary clothes. Required bills are to be collected.
Usually, the companies declare an upper limit depending on the designation. Mobile or telephone bills are evident enough. What is being practiced in many firms is that the employer asks for detailed bills, and employees are asked to identify personal calls, and such amounts are deducted from reimbursement.
Many employers encourage people to get training and update their knowledge base. So if the training is done in the relevant field that will enhance their performance, you can get it reimbursed to the extent of the bill. I believe this will be up to the company's policy. Reimbursements are not taxed in the hands of employees.
I don't think one needs to submit a receipt for incentives. What my company does is issue a cheque for incentives so that the relevant entry is made in the bank. If cash is issued, we take the signature of the receiving employee on a voucher.
Regards.
From India, Mumbai
Acknowledge(0)Amend(0)
379It is tax-exempted up to Rs. 100 per month per child and can be availed for a maximum of 2 children. If an employee has a child at a hostel, we can give Child Hostel Allowance. Tax exemption of Rs. 300 per month per child can be availed. I think school/hostel fee receipts are to be submitted as proof.
Medical bills - Bills from the hospital for any admissions, bills from doctors for any relevant examination, bills from the chemist for proper medications, etc., are to be submitted. It is either Rs. 1250 per month or Rs. 15,000 per annum. In the absence of the proper documents, the amount is fully taxable. Whatever amount your company gives as a medical allowance, the amount would be tax-exempted to the extent of the amount in the bill or Rs. 1250 per month (Rs. 15,000 per annum), whichever is lower.
Conveyance allowance is given to employees so that they can be reimbursed for the expenses they incur to come to the office from their home. An amount of Rs. 800 per month (i.e., Rs. 9,600 per annum) is tax-exempted, and no documents are required for this exemption. For physically challenged persons, this allowance is tax-exempted up to Rs. 1,600 per month (Rs. 19,200 per annum).
However, transport allowance is different and is given to employees who are going to another city for some office-related work. In such cases, we are to reimburse the expenses incurred by the employees on the tickets and hotel reservations on an actual basis. Usually, this is not a part of the salary and is paid as it incurs and is reimbursed. Relevant tickets and other bills are to be provided to claim reimbursement.
LTA is Leave Travel Allowance and is availed twice in a bracket of 4 years. The current bracket is 2011-14 (Kindly correct me if I am wrong). Usually availed in the 2nd and 4th year when the employee goes on a vacation with family. The LTA for employees is fixed based on the designation. Please note that LTA will not be paid every year but would be paid only once in two years. In order to claim LTA, employees will have to submit the tickets and other bills. The reimbursement policy is available on the net, kindly Google it.
If in case the person has not gone out on vacation and has not claimed it, and yet the company has paid the LTA amount to the employee, the full amount will be taxed. If the employee claims LTA based on bills, only the incurred amount would be reimbursed (hence exempted to that extent) or would be reimbursed on the above limit said by the policies.
Now there is a difference between food allowance and food coupons. Food allowances are tax-exempted to one meal and two teas, i.e., a lump sum of Rs. 50 a day, i.e., around Rs. 1,300 per month (assuming 26 working days) payable only for working days. Food coupons or meal vouchers, however, are fully tax-exempted.
This is a non-taxable allowance if you are required to wear a uniform to work and receive an allowance to cover its cost, or if you are provided with a uniform. This exemption only applies where the uniform is clearly distinguishable from ordinary clothes. Required bills are to be collected.
Usually, the companies declare an upper limit depending on the designation. Mobile or telephone bills are evident enough. What is being practiced in many firms is that the employer asks for detailed bills, and employees are asked to identify personal calls, and such amounts are deducted from reimbursement.
Many employers encourage people to get training and update their knowledge base. So if the training is done in the relevant field that will enhance their performance, you can get it reimbursed to the extent of the bill. I believe this will be up to the company's policy. Reimbursements are not taxed in the hands of employees.
I don't think one needs to submit a receipt for incentives. What my company does is issue a cheque for incentives so that the relevant entry is made in the bank. If cash is issued, we take the signature of the receiving employee on a voucher.
Regards.
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
Income Tax Calculator.xls