About tax planning

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sivaram

Asst Mgr-Taxation

6918 Points Joined April 2009

Dear All

The Company gives the following by means of Allowances in different heads for better tax planning and some of the heads are detailed below kindly advise as to what to do

Kindly note that these are given as allowances in payslip not as perks but if any allowances can be treated as perks if it is fully exempt then let me know as to what to do to do a better tax planning for employees

1.Uniform Allowance : if i get a bill from the employee for the entire allowance given to him as salary for the financial year can i grant exemption for the same?

2.Telephoene reimbursement: if employee gives mobile bill or land line bills for the enitre financial year can i exempt the entire allownace given under this head?

3.Servant Allowance : what is the procedure if an employee gives a bill for the same?

4.Books : for which bill is given by employee?

5computer allowance: they want to treat it as academic allowance and get it exempted on production of some repair or purchase bill can it be done?

6.Coveyance : here employee owns the car and employee meets all expenses only the salary is given by the emplyer in the form of coneyance allowance cubic capacity of car <1.6

please give good advise as to what to do and the employer has not paid any perquisite tax for any of them

give a good tax planning procedure as to how to go about it

Thanks in advance

Replies (4)

Mihir

Wealth Manager

5293 Points Joined December 2008

Uniform allowance: This allowance is exempt upto the amount actually expended by the employee for office uniform.

Telephone reimbursement: If the telephone is used for office purpose, then it is exempt.

Servant allowance: This allowance is fully taxable.

Books: Exempt upto the amount actually expended by the employee.

Conveyance allowance: Conveyance upto Rs. 800/- pm is exempt. But for a car having 1600cc owned by the employee and used for office purpose is exempt, or partly exempt on actuals if used for both office as well as personal or 1800 pm + 900 pm chauffeur.

Wait for more replies.

sivaram

Asst Mgr-Taxation

6918 Points Joined April 2009

Dear sir

Thanks for the reply

but if the employee gets rs50000/= in a year as uniform allowance and he produces uniform bill for the same amount can i give entire amount as exemption

regarding servant the employee says it has been provided by employer and i meet expenses though actually only in the nature of allowance is given can i compute actuall amt given as allowance less expensed by employee as supported by bills produced

regarding car the employee owns the car and employer gives this in the form of allowance only actually expenses is met by employee only now tell me as to how to do the tax computation employee is giving pertol bills and repairs in this regard

can i compute the whole amount given as expense less the monetary amount as you stated

please do reply as i need to close this tax issue

Mihir

Wealth Manager

5293 Points Joined December 2008

Uniform allowance should be actually expended by the employee for official duty, only then it shall be exempt u/s 10(14). Rs. 50,000/- seems a big amount. One will have to check the documents the employee is submitting.

Servant allowance is fully taxable so there are no exemption available.

If the car is exclusively used for office purpose then it is exempt. If used partly for personal and partly for office, then actual expenses incurred less 1800pm + 900pm shall be taxable perquisites.

Hope this helps.

sivaram

Asst Mgr-Taxation

6918 Points Joined April 2009

Dear sir

Thanks then what about computer allowance they want to deem it as academic allowance and want to be exempt can it be done if employee gives bills in this regard ?

in regard to conveyace of car can the actual expense exceed the car allowance given by the employer or it should be restricted to the allowance actually given ?