Scribd
Upload
63 views1 page

Tax Exemptions for Employee Benefits

Leave travel assistance provides an exemption for actual travel expenses incurred by an employee and their family for travel within India up to the cost of an economy airfare twice over four years. Conveyance allowance of up to Rs. 800 per month is exempt from taxes to compensate for commuting costs, unless free transportation is provided. The taxable value of a motor car allowance is calculated at Rs. 1,100 per month regardless of the employer's actual expenditure of Rs. 17,000 per month on acquiring, maintaining and providing the car. House rent allowance exemption is calculated as the lowest of 50% of salary in major cities or 40% elsewhere, the actual allowance received, or the rent paid in

Uploaded by

rjr19051988
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
63 views1 page

Tax Exemptions for Employee Benefits

Leave travel assistance provides an exemption for actual travel expenses incurred by an employee and their family for travel within India up to the cost of an economy airfare twice over four years. Conveyance allowance of up to Rs. 800 per month is exempt from taxes to compensate for commuting costs, unless free transportation is provided. The taxable value of a motor car allowance is calculated at Rs. 1,100 per month regardless of the employer's actual expenditure of Rs. 17,000 per month on acquiring, maintaining and providing the car. House rent allowance exemption is calculated as the lowest of 50% of salary in major cities or 40% elsewhere, the actual allowance received, or the rent paid in

Uploaded by

rjr19051988
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 1

Leave travel assistance.

Reimbursement of leave travel expenses incurred by you and your family on travel to any place in India is exempt to the extent of the actual amount spent on travel. Expenditure on hotel accommodation is not included while calculating this exemption. Further, this exemption is available only up to the cost of air travel in economy class to your destination, and is available twice in a block of four years. Conveyance Allowance. This is meant to compensate you for the cost incurred in commuting to your place of work. Conveyance Allowance is exempt to the extent of Rs.800 per month, irrespective of the amount actually spent by you in commuting to your work place. The exemption is not available to you if your employer has provided you free conveyance. Motor car allowance. The taxable value of the perquisite is not related to the amount actually spent by the employer on acquiring, or providing, and maintaining the car. Let us assume, for example that the company you work for has acquired a car on a hire purchase basis, and is paying a monthly instalment of Rs.8,000, Rs.3,000 to a driver, and spends Rs.5,000 on fuel, and an average of Rs.1,000 on taxes, insurance and maintenance, per month. Thus, though your company spends Rs.17,000 per month for providing you the car, the taxable perquisite value in your hands would be only Rs.1,100 per month - a reduction of Rs.15,900 per month from your taxable income. House Rent Allowance: These days, it is included in your pay package. If you pay rent for the house, you live and that house is not owned by you, then you can claim some exemption from Income Tax. You can calculate very easily the portion of exemption. The least of the following is exempt: 1. An amount equal to 50 percent of salary, where residential house is situated at Mumbai, Delhi, Kolkatta or Chennai and an amount equal to 40 percent of salary, where residential house is situated at any other place. 2. House Rent Allowance received by the employee in respect of the period during which the rental accommodation is occupied by the employer during the year or 3. The excess of rent paid over 10 percent of the salary. Salary includes basic, dearness allowance and commission based on a fixed percentage of turnover achieved by employee as per terms of contract of employment.

You might also like