Sunday, December 10, 2023

Creating liberating content

Winter holidays travel plan:...

Singapore is a travel hub filled with cultural...

Visiting Italy? Check out...

Archaeologists excavating the ancient Roman city of Pompeii...

Japan: Yokohama unveils ambitious...

Yokohama city of Japan is a popular tourist...

Gauri Khan shares designs...

Gauri Khan (centre) with Shane and Falguni | Photo Credit: Special...
HomeNewsUpdatesImportant Tips When...

Important Tips When You Want to Restructure Your Salary



Arpit Kulshrestha

Tips to Remember While Restructuring Your Salary

Reorganizing your compensation might increase your take-home pay while lowering your tax burden. Making the decision to change the structure of your compensation package at the start of the fiscal year is one approach to do this. You may always request the same thing if your company doesn’t provide the choice.

You may make sure that you keep more of your hard-earned cash and pay less in taxes by restructuring your paycheck in a tax-efficient manner. Simply by taking use of specific exclusions and deductions that are already provided in the Income-tax Act, you may make your pay structure more tax effective.

A few significant exemptions and deductions that a taxpayer should be aware of while rearranging salary:

Internet and Telephone Bills

Not all reimbursements for the actual telephone and internet bill would be liable for tax. The employee withheld the bills in order to claim the tax exemption.

Transportation Fees

Any conveyance allowance provided to the expenditure made through the employee to do their work would get exempted given that the conveyance would not be allowed via the employer or would be owned by the employee.

But when the employee utilised the car of the company and the company repays the salary of the driver, insurance, maintenance, and fuel expenses then the taxable value would stand at Rs 2,700 per month (cars with cubic capacity within 1.6 ltr) or Rs 3300 per month (cars with engines over 1,600 cc) (car with a cubic capacity exceeding 1.6 Litre).

For the case when the employee owns a car then the exemption of Rs 2700 per month or Rs 3300 per month for the driver’s salary, maintenance, and fuel expenditure is paid and refunded via the employer.

Standard Tax Deduction

A standard deduction of Rs 50,000 is been qualified to get claimed by every employee from the gross salary and could get claimed the same as an exemption.

House Rent Allowance(HRA)

The HRA should be included in the salary package as well since, according to the legislation, HRA exemption is permitted in the event that the least of the following occurs:

  • Actual House Rent Allowance(HRA) obtained via the employee
  • 40% of the salary for a non-metro city or 50% of the salary if the rented property is in metro cities like Mumbai, New Delhi, Kolkata, and Chennai
  • Actual rent paid must be less than 10% of the salary

Meal Allowance

An additional advantage that could be started as a part of the salary package is the meal allowance that does not levy tax up to Rs 50 per meal. It does not in used widely.

Leave Travel Allowance(LTA)

Leave Travel Allowance (LTA) is associated if claimed twice in a four-year period for travelling anywhere in India through the quickest route available with family. Following covid, travel has reopened, and hence the significance of integrating leave travel allowance into the compensation structure has arrived again.

Contribution to National Pension Scheme and Provident Fund

On the basis of the provident fund contribution the deductions to the max limit of Rs 1,50,000 would be available under section 80C of the act and contribution to the National Pension scheme u/s 80CCD of the act.

Tips for Salary Restructuring to Reduce Income Tax in a Table Format

Mobile and internet bills reimbursement Bill reimbursement for mobile and internet services.
Meal Allowance Not taxable upto Rs.50 Per Meal
Transportation Fees An employee’s actual expenses in performing his/her duties are exempt if the conveyance was not provided by his/her employer or owned by him/her
Driver’s wage, maintenance, insurance, and fuel expenses Depending on the ownership of the car, the taxable value is 2,700 to 3,300 per month
Standard Tax Deduction INR 50,000
Reimbursement of Leave Travel Allowance (LTA) If you claim twice in four years, you are exempt
House Rent Allowance (HRA) HRA exemption is permitted least of the below:

  • Employee’s actual HRA
  • 40% of the salary for a non-metro city or 50% of the salary if the rented property is in metro cities like Mumbai, New Delhi, Kolkata, and Chennai
  • The actual rent should not exceed 10% of the salary

Contribution of EPF INR 1.5 lakh claimed as a tax deduction





Source link

Get notified whenever we post something new!

spot_img

Create a website from scratch

Just drag and drop elements in a page to get started with Newspaper Theme.

Continue reading

Winter holidays travel plan: 5 family-friendly eco-adventures in Singapore

Singapore is a travel hub filled with cultural intersections, futuristic cityscapes, and enthralling adventures. The city offers a diverse array of quintessentially Singaporean experiences - ranging from iconic landmarks to hidden treasures - each...

Visiting Italy? Check out this ‘prison bakery’ in ancient Roman city of Pompeii

Archaeologists excavating the ancient Roman city of Pompeii have uncovered a "prison bakery" where slaves and blindfolded donkeys were kept locked up underground to grind grain for bread, officials said this week. ...

Japan: Yokohama unveils ambitious plan to boost tourism through sustainability and innovation

Yokohama city of Japan is a popular tourist destination and further intends to grow its tourist influx by making the city more sustainable and smart. ...

Enjoy exclusive access to all of our content

Get an online subscription and you can unlock any article you come across.