The structuring of salary by including more of tax free /confessional perquisites can facilitate in reducing the total tax incidence on the salary income. In most of the cases, salary structuring is being done by the employer and the employees do not pay much attention on the components of the salary or the way the salary structuring is done. This is primarily because the employees are not aware of importance of perquisites as tax saving tools. We list below perquisites which are either totally tax free or are determined at a lower value:

a)            The provision of medical facilities and reimbursement of medical expenses to the extent of Rs. 15,000 per year;

b)            Refreshment  provided by your employer to you during working hours;

c)            Free meal provided by your employer during working/ business hours or through paid non-transferable (usable only at eating joints) vouchers if value thereof in either case does not exceed Rs. 50 per meal;

d)           Amount spent on your training  or fees paid for refresher management course;

e)            Employer’s contribution to staff group insurance scheme;

f)             Leave Travel Concession (LTC);

g)            Payment of annual premium by employer on personal accident policy effected by him for his employee;

h)            All medical insurance payment approved by IRDA, whether paid directly or reimbursed to the employees, shall not be treated as a taxable perquisite;

i)              Re-imbursement of expenses in respect of car (which is owned by you and used for personal and official purpose restricted to an amount based on cubic capacity of the car) plus additional Rs. 600 per month;

j)              Free educational facility provided in an institute owned/ maintained by your employer to your children provided cost/ value does not exceed Rs. 1000 per month per child (no limit on number of children);

k)            Interest-free/ confessional loan of an amount not exceeding Rs. 20,000;

l)              Computer/ laptop given (not transferred) to an employee for official/ personal use;

m)          Accommodation provided on transfer of an employee in a hotel for a period not exceeding 15 days in aggregate;

n)            Interest free loan for medical treatment;

o)            Initial fees paid by employer for acquiring corporate membership of a club;

p)            Use of health club, sports or similar facility provided uniformly to all employees by the employer;

q)            Periodicals and journals required for discharge of work;

r)             Conveyance facility provided to an employee to cover the journey between office and residence;

s)             The value of any benefit provided free of cost or at a confessional rate by a company to its employees by way of allotment of shares, debentures or warrants under the Employee stock option plan/ scheme;

t)             Income-tax on perquisites in kind paid by the employer.

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Contact us now in pursuit of simplifying individual taxation!

Alok Patnia

Founder and Director at www.taxmantra.com