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Salary Structure For Tax Saving

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)

03 May 2011

Details		Amount			Details of Salary Break up
Basic ( 35% of package)		37933			With salary
HRA		15173			With salary (Non Taxable)
Convenyance Allowance		800			With salary (Non Taxable)
Additional HRA		5690			With salary
C.C.A.		5690			With salary
Production Allowance		7587			With salary
Children Education Allowance		200			With salary (Non Taxable)
Car Allowances		11380			With salary
Washing Allowance		500			With salary
Sub Total (A)		85111
Medical Reimb		1250			Non Taxable
LTA		3160			Non Taxable
Magazine		1000			Non Taxable
Car Maintenance		11380			Non Taxable
Soft Allowances		1897			Non Taxable
Attair		3793			Non Taxable
Sub Total (B)		22480
PF		780			12% of Basic up to 6500
ESI		0
SubTotal (C )		780
Adhoc Allowance	Sub Total (D)		158			with salary
Total Per Month (A+B+C+D)		108380
Total Per Annum		1300560
OTHERS
1. Leaves : Earn -15, Casual -7, SL -8
2. Hospitalization Medical Family Insurance of2,50,000 Per Annum
3. In addition to above , you will be provided a company car with driver for official purpose & the Petrol
expenses will be reimbursed to you on actula basis.
4. You will be provided Mobile Phone by the company for official use with the maximum price of handset is limited									to
Rs. 20000/-. After 3 years you would be entitled to puchase new handset subjected to the condition of the handset.
5. Your official Mobile expensed will be paid by the company Directaly to the service provider.

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10 Replies

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

DEAR ALL,

PLEASE FIND THE ABOVE SALARY STRUCTURE OF WELL KNOWN COMPANY.

PLEASE GIVE FEEDBACK ON THE ALLOWNACE GIVEN THERE, WHETHER THESE ARE TAX FREE.

COMMENT SPECIFY ON MOTOR CAR MAINTAINACE, BECASUSE COMPANY IS ALSO PROVIDING CAR WITH DRIVER.

PLEASE GIVE FEEDBACK

THANK S & REGARDS

CA. B.K.BANSAL

CMA. Subhash Kumar Jha (General Manager - Finance) (8391 Points)
Replied 03 May 2011

There is no problem in the status of first 9 allowances (paid with salary). [only HRA , Conv , Education Allow are tax free]

In the 2nd lot of reimbursements, no issues with medical & LTA.

Magazine : Tax free against submission of bills, if the magazine can be proved to be for office use.

car maintenance : its a taxable perquisite (value will be determined by the CC of the car

engine, purpose of use & driver facility)

soft allowance : In my opinion its a taxable perquisite (Other expert's views are welcome)

Attire : If the company has a uniform, the its tax free against submission of bills. Otherwise its fully

taxable.

1 Like

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

Attire allowance. Any allowances granted to meet expenditure incurred on the purchase or maintenance of uniform that must be worn during the performance of duties is tax exempt. Note: the exemption is available for allowances granted to meet the expenditure incurred on uniform meant to be worn while on duty.

However, some companies, in granting an attire allowance (as against uniform allowance) to employees, often stretch the benefits of this exemption. The argument offered is that employees are required to wear formal suits, jackets and ties, and hence the need for an allowance towards meeting such expenses. At times, it has even been argued that since it is the employer who wants his employees to be smartly dressed at work, the allowance should not be deemed a taxable perquisite. This again is a case of stretching the law beyond the legislative intent.

The exemption is for uniform allowance, and not for any attire bought by the employee. A jacket or a tie cannot be equated with uniform, and hence the exemption is to be restricted to allowances granted for the purchase and maintenance of uniform worn on duty. Surely, white-collar employees wouldn’t want to be categorized with watchmen or waiters in uniform, particularly when there is a growing trend towards an informal dress code at work.

1 Like

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

Leave Travel Concession or Assistance [S. 10(5) ]

• available to Indian as well as foreign citizen for himself/spouse/children/dependent parents, brothers and sisters.

• limited to amount actually spent on travelling of employee and his family members.

• during employment or on retirement or on termination.

• for travelling to any place in India.

• allowed twice in a block of four calendar years.

• block commenced from calendar year 1986. (Current block — 2010-13).

• exemption on travel concession will not be admissible to more than two surviving children of an individual born after
1-10-1998.

• allowance in cases of destination connected by air/rail is restricted to economy class air fare of national carrier/A.C. first class fare by shortest route

How it is possible that LTA will be part of salary, becasuse LTA will be reimbursed on submission of acutal bill incurred for twice in 4 years block period.

i.e Employer should hold salary part as LTA till date of submission of bill. and pay only 2 times in 4 years .

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

Research allowance. Employees are often given an allowance to meet the expenditure incurred on the purchase or subscripttion of books and periodicals. It is argued that since the expenses are incurred to keep the employee up-to-date with current trends, the allowance should not be considered a taxable perquisite. Is the argument justified?

Now, there is a rule that states that any allowance granted to encourage academic, research and training activities in educational and research institutions is to be exempt from tax. Clearly, in order to claim the exemption, two conditions must be met. One: the allowance should be to encourage academic, research and training pursuits. Two: the employee should be working in an educational or research institution to receive the allowance.

In such a scenario, allowances granted to employees to meet the expenditure incurred on books, periodicals, magazines and newspapers would not, generally, be considered an exempt perquisite. But then, then there would be no taxable perquisite in the employee’s hands if the employer himself buys the publications, and allows employees to borrow them to read

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

Reimbursement of medical expenses. Any sum paid by an employer in respect of the medical expenditure of the employee or his family members is exempt from tax to the extent of Rs 15,000 a year. This exemption is available only if the employee actually incurs the expenditure, and submits vouchers to the employer.

Clearly, the expenses ought to have been incurred on medical treatment. Therefore, vouchers for the purchase of toiletries, chawanprash, horlick etc from a chemist are not eligible for the exemption. Similarly, expenses incurred on eye glasses or sun glasses cannot be considered medical expenses by arguing that such expenses have been incurred on healthcare and that the employee is required to wear the glasses on medical grounds.

Again, the limit of Rs 15,000 is for non-hospitalization expenses. Hospitalization expenses reimbursed by an employer are exempt if the hospital is recognized under the central government health scheme or it is a private hospital approved by the Chief Commissioner of Income Tax for a disease or ailment listed in the income tax rules . So, the next time you fall sick, please remember you are expected to ensure you are afflicted with one of the prescribed diseases. And don’t rush to the nearest hospital or the one recommended by your doctor; instead, hunt for a hospital approved by the Commissioner. Well, the red tape attached to this exemption would have offered much cause for mirth, but for the fact that it is tragic and inhuman!

Harpreet (* * * * * *) (1670 Points)
Replied 03 May 2011

Nice and Great structure of Salary breakup. Thank You Mr. Bijender

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 03 May 2011

Dear Mr. harpeet.

There is lot of confusion in this structure.

I have posted it for expert's comment here.

Hence wait for comments from others.

(Guest)

useful info!

Deepak sharma (Learner) (1431 Points)
Replied 04 April 2015

Dear All,

Please provide New Salary Structure (Breakup), as per latest Income Tax/PF/Labour and others Law/rule. Please also provide if any calculator to get breakup of Total Salary.

Thanks !

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