Specified Employee

• He is a director of a company, or

• He holds 20% or more of equity voting power in the company,

• Monetary salary in excess of  50,000

Salary is treated only when there is employer and employee relationship between person who gives and who receives.

Specific allowances that are fully exempt in the hands of employees

1. Travelling allowance

2. Daily Allowance

3. Conveyance allowance

4. Helper allowance

5. Academic allowance

6. Uniform allowance

7. Allowances and perks paid by Fully exempted

Government of India to an Indian citizen outside India

LEAVE TRAVEL CONCESSION

• An individual can avail the benefit of LTC offered by his employer, twice in a block of four years.
• LTC encashed without performing journey is fully taxable
• The journey should be made from the shortest route and  amount in excess of shortest route will  be taxable.
• Family includes spouse and children and parents, siblings who are totally dependent upon the Individual

HOUSE RENT ALLOWANCE

 Least of the amount will be exempt :

•  HRA received.

•  50 % of salary  and 40 % for cities other than metro cities.

• Rent paid is more than 10% of salary.

Salary for HRA= Basic Pay + DA(considered for retirement benefits) + Commission ( if received as a fixed percentage on turnover as per terms of employment)

OTHER ALLOWANCES

Allowances Exemption

 Education Allowance                               100 p.m.per childupto2children

 Hostel Expenditure Allowance              300 p.m.per child  upto 2 children

Transportation Allowance                       (a) 70% of the amount received, or

                                                                         (b) Rs10,000 p.m.

GRATUITY

1. Government Employee: Fully exempted from tax u/s 10
2. Non-Govt.Employee:

1. Employee covered by Payment of Gratuity Act,1972

Exemption u/s 10(10)(ii)

Least of the followings:

(i) Actual amount received                                                                                              xxx

(ii) 15/26 × Last drawn salary × No. of years of completed                                                                                                                   xxx

service or part thereof in excess of 6 months

(iii) Maximum Limit                                                                                                10 Lakh

Note: Salary = Basic Pay + Dearness Allowance in case of covered under gratuity act while in other case commission will also be included when it is given on fixed % of the turnover. And in both case salary will be taken of average salary drawn during last10 months .

Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this section

PENSION

1. Uncommuted Pension or Monthly Pension  taxable in both govt and non-govt employee.
2. Commuted Pension:
   1. Govt employee fully exempt.
   2. Non-govt employee if
      1. pension received – 1/3 of commuted pension
      2. pension not received – 1/2 of commuted pension

LEAVE ENCASHMENT

Leave encashment is the salary received by an individual for leave period. It is a chargeable income whether he is a government employee or not. Under section 10(10AA) (i) there is also a provision of exemption in case of leave encashment depending upon whether he is a government employee or other employees.

WHAT IS PERQUISITE?

Under section 17(2) of Income Tax Act, 1961 perquisite is defined as:

• Amount paid for the rent-free accommodation provided to the assessee by his employer
• Any concession in the matter of rent respecting any accommodation provided to the assessee by his employer
• Any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:

thank u very much renu

Really nice SAS....sorry my thanks limit got finished.

Accomodation :-

For govt employee  _ Licence fee paid by him

For non-govt employee :-           

             Population exceeds 25 lakhs                                          15% of salary                     

            Population  from 10- 25 lakhs                                        10% of salary.

            Population less than 10 lakhs                                         7.5 % of the salary

In case of hotel stay more than 15days                                               24% of the salary

Value of furniture :-

• If owned by employer, 10%p.a. of original cost of such furniture                   xxx

• If hired from third party, then Actual hire charges                                               xxx

Less: Any charges paid or payable by the employee                                   xxx

Value of the furnished accommodation                                                          xxx