Hello All,
I need your help to redesign the salary structure to save the employees' tax. Recently, we are following the below salary structure. Do guide me if we can save the taxes of employees by adding or deleting any component or by increasing or decreasing any limit of certain components. (Here in our organization, the majority of employees would like to know other sources to save taxes apart from those which come under 80C).
- BASIC (Gross * 25%)
- HRA (Gross * 15%)
- LTA (40,000 Rs/- Annually) per month 3333 Rs/-
- Conveyance (800 * 12) = 9600 Rs/-
- Medical Allowances (1250 * 12) = 25000 Rs/-
- Employee + Employer PF (6500 * 12%) / (6500 * 13.61%)
- TAX (200 * 12 / Feb 300 Rs) = 2500 Rs/-
Thank you and awaiting your response!
From India, Mumbai
Acknowledge(0)
Amend(0)
2I need your help to redesign the salary structure to save the employees' tax. Recently, we are following the below salary structure. Do guide me if we can save the taxes of employees by adding or deleting any component or by increasing or decreasing any limit of certain components. (Here in our organization, the majority of employees would like to know other sources to save taxes apart from those which come under 80C).
- BASIC (Gross * 25%)
- HRA (Gross * 15%)
- LTA (40,000 Rs/- Annually) per month 3333 Rs/-
- Conveyance (800 * 12) = 9600 Rs/-
- Medical Allowances (1250 * 12) = 25000 Rs/-
- Employee + Employer PF (6500 * 12%) / (6500 * 13.61%)
- TAX (200 * 12 / Feb 300 Rs) = 2500 Rs/-
Thank you and awaiting your response!
From India, Mumbai
Acknowledge(0)Amend(0)
u can add the following in your salary structure : 1. Education allow - Rs.100/- per child p.m. 2. HRA should be made 50% of Basic. 3. Allow PF contribution on full Basic without any limit.
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Increase the Basic to 50% of basic so that more HRA can be considered for tax planning purposes. pon
From India, Lucknow
Acknowledge(0)Amend(0)
From India, Lucknow
Acknowledge(0)Amend(0)
Hi, You may add 1.Telephone reimbursements 2.Medical reimbursements: 3.Company provided car 4.Club membership 5.Meal coupons: 6.uniform Allowances 7.CEA 8.Magazine 9.Car Maintenance
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi Aditya,
I have a few queries on the same. I hope you won't mind explaining it.
1) As you have mentioned telephonic reimbursement, what would be the maximum limit for the same? And what about for those employees who are using prepaid connections? Can we apply a fixed amount for everyone, or is it compulsory for them to submit their bills?
2) Medical Reimbursement: If I am not mistaken, this would apply to those employees who were on sick leave for a longer duration, say 3 days or more. They can submit their actual medical treatment bills, and we will reimburse it. Is that correct? Please correct me if I am wrong.
3) Company-provided car: We have the majority of employees who use their cars for office purposes. Is it possible for them to reimburse their petrol bills, or can we reimburse based on the distance from their house to the office? If yes, what would be the maximum limit, and how much should we reimburse per kilometer?
4) Club Membership: How does this work? What is the calculation or limit for that?
5) Meal Coupons: Again, we do not have any facility called meal coupons. Can we apply a fixed amount for all, e.g., Rs. 50 per meal?
6) Uniform Allowances, CEA, Magazine, Car Maintenance: Kindly elaborate on these terms briefly.
I would really appreciate your help, Aditya.
Thank you in advance.
Regards,
Knowledge - HR
From India, Mumbai
Acknowledge(0)Amend(0)
I have a few queries on the same. I hope you won't mind explaining it.
1) As you have mentioned telephonic reimbursement, what would be the maximum limit for the same? And what about for those employees who are using prepaid connections? Can we apply a fixed amount for everyone, or is it compulsory for them to submit their bills?
2) Medical Reimbursement: If I am not mistaken, this would apply to those employees who were on sick leave for a longer duration, say 3 days or more. They can submit their actual medical treatment bills, and we will reimburse it. Is that correct? Please correct me if I am wrong.
3) Company-provided car: We have the majority of employees who use their cars for office purposes. Is it possible for them to reimburse their petrol bills, or can we reimburse based on the distance from their house to the office? If yes, what would be the maximum limit, and how much should we reimburse per kilometer?
4) Club Membership: How does this work? What is the calculation or limit for that?
5) Meal Coupons: Again, we do not have any facility called meal coupons. Can we apply a fixed amount for all, e.g., Rs. 50 per meal?
6) Uniform Allowances, CEA, Magazine, Car Maintenance: Kindly elaborate on these terms briefly.
I would really appreciate your help, Aditya.
Thank you in advance.
Regards,
Knowledge - HR
From India, Mumbai
Acknowledge(0)Amend(0)
Hi,
1.It should be termed Medical Reimbursement, not Medical Allowance. This is because allowance per se is taxable in all cases, except those specifically exempted.
For general medical reimbursement, Rs 15,000 is the maximum tax break that an individual can avail of against actual supporting documents.
2.telephone reimbursement provided to employees is not taxable. This is as per Rule 3(7)(ix)
Telephone connection includes both land line and mobile connections. While there is no explicit reference to data card connection in Rule 3(7)(ix), some experts opine that data card falls under the mobile phone category since a data card is just a SIM card.
1. There is no explicit reference to the maximum number of connections allowed, in the rule. Organizations typically allow one land line and one mobile connection under Telephone Reimbursement for each employee.
2. The connections have to be in the name of the employee.
3. Employees should submit telephone bills to their organization while seeking telephone reimbursement.
4. Expenses incurred towards both pre-paid and post-paid mobile connections are admissible for tax exemption.
3.Car Allowances: If the company provides you a car for personal and official purposes and reimburses the fuel, insurance, maintenance and driver’s salary, the taxable value shall be: in case the cubic capacity of the car is less than or equal to 1600cc – Rs 1,800 per month (plus Rs 900 for the driver) and in case the cubic capacity of the car is greater than 1600cc – Rs 2,400 per month (plus Rs 900 for the driver).
4.Free meals provided to you through paid vouchers, not transferable and usable only at eating joints to the extent of Rs 50 per meal are safe.
5.Uniform Allowance - Uniform allowance is not considered as Perquisite U/s. 10(14). This however needs to be a uniform not a civil dress.
6.Asset assistance given by your employer. For example, provision of a computer or laptop owned by the company and provided to you or any member of your household is not taxable in your hands.
7.The reimbursement of health club, sports club membership fees and similar facilities provided uniformly to all employees would not be taxable in your hands.
8.Children’s Education Allowance(CEA) is exempt up to Rs 100 per month per child up to a maximum of two children. Also, Rs. 300 per month per child up to two children is allowed if they are in hostel
From India, Mumbai
Acknowledge(0)Amend(0)
1.It should be termed Medical Reimbursement, not Medical Allowance. This is because allowance per se is taxable in all cases, except those specifically exempted.
For general medical reimbursement, Rs 15,000 is the maximum tax break that an individual can avail of against actual supporting documents.
2.telephone reimbursement provided to employees is not taxable. This is as per Rule 3(7)(ix)
Telephone connection includes both land line and mobile connections. While there is no explicit reference to data card connection in Rule 3(7)(ix), some experts opine that data card falls under the mobile phone category since a data card is just a SIM card.
1. There is no explicit reference to the maximum number of connections allowed, in the rule. Organizations typically allow one land line and one mobile connection under Telephone Reimbursement for each employee.
2. The connections have to be in the name of the employee.
3. Employees should submit telephone bills to their organization while seeking telephone reimbursement.
4. Expenses incurred towards both pre-paid and post-paid mobile connections are admissible for tax exemption.
3.Car Allowances: If the company provides you a car for personal and official purposes and reimburses the fuel, insurance, maintenance and driver’s salary, the taxable value shall be: in case the cubic capacity of the car is less than or equal to 1600cc – Rs 1,800 per month (plus Rs 900 for the driver) and in case the cubic capacity of the car is greater than 1600cc – Rs 2,400 per month (plus Rs 900 for the driver).
4.Free meals provided to you through paid vouchers, not transferable and usable only at eating joints to the extent of Rs 50 per meal are safe.
5.Uniform Allowance - Uniform allowance is not considered as Perquisite U/s. 10(14). This however needs to be a uniform not a civil dress.
6.Asset assistance given by your employer. For example, provision of a computer or laptop owned by the company and provided to you or any member of your household is not taxable in your hands.
7.The reimbursement of health club, sports club membership fees and similar facilities provided uniformly to all employees would not be taxable in your hands.
8.Children’s Education Allowance(CEA) is exempt up to Rs 100 per month per child up to a maximum of two children. Also, Rs. 300 per month per child up to two children is allowed if they are in hostel
From India, Mumbai
Acknowledge(0)Amend(0)
There is NPS option under sec 80 CCD which is tax exempt upto 10% of basic+DA. Pon
From India, Lucknow
Acknowledge(0)Amend(0)
From India, Lucknow
Acknowledge(0)Amend(0)
Hi,
For car allowances, you need to submit the details and the bills.
For meal coupons, you may receive 50 Rs per meal as a tax exemption if the employer is providing non-transferable coupons for working days.
From India, Mumbai
Acknowledge(0)Amend(0)
For car allowances, you need to submit the details and the bills.
For meal coupons, you may receive 50 Rs per meal as a tax exemption if the employer is providing non-transferable coupons for working days.
From India, Mumbai
Acknowledge(0)Amend(0)
So we can not reimburse the meal amount...correct? as company is not providing any coupon....
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi, yes, if in your salary slip that allowances is provided then you may claim.
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi, Aditya, If Company does not provide any meal coupon to employees and directly show in salary slip that Meal expense is (total no. of working days*50rs) ..Can employee Claim that?
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)Join Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
EMPLOYEE SALARY INCOME TAX CALCULATION.xls x
Creating a Competitive Salary Structure.doc