Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

TAX PLANNING FOR THE SALARIED!

You can enjoy a maximum take home pay by including these tax free allowances & perks in your annual pay package!

The Income-tax Act provides for a number of allowances and perquisites which have been notified as tax free and every salaried taxpayer must endeavour to negotiate his pay package in a manner that the same can include such tax free allowances and perquisites. This would ensure that he is able to take maximum take-home pay per month with the minimum deduction of tax. 

Some of the important tax free allowances and perquisites are listed here under: 

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TAX EXEMPT REIMBURSEMENTS!

Salaried employees should plan to enjoy conveyance, telephone, entertainment & medical reimbursements!

Under Section 17(2) of the Income-tax Act read with Rule 3 of the Income-tax Rules, any reimbursement granted by an employer to his employee for telephone expenses (including a mobile phone), actually incurred by an employee is treated as an exempt perquisite (perk). It is pertinent to note that there is no monetary ceiling prescribed in regard to this reimbursement.

 TAX FREE MEDICAL REIMBURSEMENTS

            Under Section 17(2) of the Income-tax Act, reimbursement made by an employer of upto Rs.15,000 of medical expenses in a year, actually incurred by an employee on his medical treatment or the treatment of any member of his family, is treated as an exempt perk.  (more…)

TAX FREE SAYONARA!

Receive a bouquet of tax benefits when you say good bye

to your employer on retirement or termination of service!

Under the provisions of Section 10(10) of the Income-tax Act, gratuity received by an employee from his employer, on retirement, or becoming incapacitated before retirement, or expiring, or whose services are terminated, is exempt as under: (more…)

COMPUTING TDS ON SALARY

Report all eligible exemptions & deductions to your employer to ensure non-deduction of excess TDS from your salary!

             Section 192 of the Income-tax Act prescribes for tax deduction at source out of payments representing any income chargeable to tax under the head ‘Salaries’. The provisions for tax deduction at source from Salaries during each Financial Year are explained by the Central Board of Direct Taxes (CBDT) under a special Circular.

             TDS under Section 192 is required to be calculated on the basis of the prevalent rates of income-tax on the estimated salary income and is required to be deducted on a proportionate basis at the time of each payment. For the said purpose the employer is required to consider various exemptions and deductions as prescribed under the Circular while computing the actual amount of income-tax to be deducted. (more…)

MERE DECLARATION CAN ENTITLE EXEMPTION!

SC holds that for TDS purposes Employer can grant exemption to Employee without supporting evidence

Section 10 of the Income-tax Act grants tax exemption in the case of salaried employees, in respect of various allowances such as leave travel concession (LTC) under Section 10(5), conveyance allowance under Section 10(14) and the like, within the scope of prescribed conditions and monetary limits. Similarly, Section 17(2) provides that reimbursement of medical expenses within prescribed limits shall also enjoy tax exemption in the hands of employees.

In the above regard, one of the moot questions that has always been a matter of debate is whether an employer, for purposes of tax deduction at source (TDS), can grant exemption to such an allowance or reimbursement claimed exempt by the employee, on the basis of a declaration made by him in the matter or whether the employer is required under law to collect and examine supporting evidence in this regard before entertaining the employee’s claim. (more…)

TAX HOLIDAY FOR LEAVE TRAVEL CONCESSION

Get LTC from your Employer and Enjoy Family Vacation with Tax Exemption

One of the important tax free perquisites available to salaried employees is ‘Leave Travel Concession’ (LTC) or ‘Leave Travel Assistance’ (LTA) which is treated as exempt under Section 10(5) of the Income-tax Act read with Rule 2B of the Income-tax Rules.

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HOW TO PLAN ZERO TAX ON ANNUAL PAY OF RS.4.50 LAKHS?

Minimize Tax on even Higher Incomes

Through Intelligent Pay Packet Planning!

Are you aware that as a salaried taxpayer you can conveniently structure your annual pay package of up to Rs.4,50,000 on a Zero Tax Basis? (more…)

IS YOUR PAY PACKAGE REALLY TAX FRIENDLY?

IS YOUR PAY PACKAGE

REALLY TAX FRIENDLY?

Enjoy Zero Tax on Rs.4.20 lakhs to just 7.77% on Rs.13.5 lakhs

By Smart Planning of your Annual Pay Package & Deductions!

                  The Income-tax Act provides for a number of allowances and perquisites which have been notified as tax free and every salaried taxpayer must endeavour to negotiate his pay package in a manner that the same can include such tax free allowances and perquisites. This would ensure that he is able to take maximum take-home pay per month with the minimum deduction of tax.   

(more…)

TAX FREE RETIREMENT BENEFITS!

Retirement Benefits that can be claimed as fully tax exempt:

  • Gratuity upto Rs.10,00,000
  • Leave Encashment upto Rs.3,00,000
  • VRS Compensation upto Rs.5,00,000
  • Entire PF Balance, without any ceiling (more…)

TAX FREE DIWALI GIFT FOR YOUR EMPLOYEES!

Gift Below Rs.5,000 on any Ceremonial Occasion

Treated as a Tax Free Perk for the Salaried

“If you give what can be taken, you are not really giving,” quoted the noted Sufi author Idries. If you as an employer are trying to think of giving something to your employees during the coming festive season, out of which even the Taxman cannot take anything, here is a smart idea! (more…)
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