Income Tax Allowances & Deductions Allowed to Salaried Individuals
An employer in only helping employee in tax savings. Under Income Tax Act there are 25 perquisites which are allowed but not all are relevant. Some of them are allowed under specific conditions.
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In this post, we will discuss only those which are simple to avail and provide max tax savings. For tax savings, food coupons is most popular perquisite option. Amount is non-taxable if the cost to the employer is Rs 50 or less per meal per day. Assumption is 2 meals per day for 20 working days in a month excluding holidays, Saturdays and Sundays.
This amount is non-taxable. Gift in cash or which can be converted to money is taxable. These gift vouchers are accepted only at select retail outlets which have tie up with Sodexo. So enjoy your Diwali gift sponsored by company from your own salary which is tax free :. Loan is non-taxable only if the total loan amount is less than or equal to Rs 20, or Loan is provided for treatment of diseases under Rule 3A of income tax act. This facility can be utilized by junior employees for tax savings i. Bring your own devices at work. In this case, employer allow employee to buy own device i.
It can help you in tax savings. The advantage is that taxable value of perquisite is NIL for employee.
When you leave the job, these assets can be transferred from employer to employee or retained by the company. Besides laptop, tablet and computer, depending on your job profile you can also buy other movable assets. Rs 10, only. Effectively there is a tax savings of Rs 20, It can cut down your tax outflow because employee is only taxed at the perk value of the car.
The perk value of the car is Rs per month if the car is upto cc. For cars of more than cc, perk value is Rs per month. There are over , establishments in France that accept the vouchers, and about 3. Next door in Belgium, the meal voucher scheme is equally sophisticated. One voucher is issued for each working day that the employee has been present at work, and therefore adjustments to payroll need to be made each month to reflect absences.
Vouchers have a maximum validity of one year and should only be used by the individual named on them for the purchase of food although smaller retail establishments are notorious for accepting them for a range of purchases, including mobile phone credit. In all voucher companies switched to an electronic system that provided employees with chip-and-pin cards. This scheme did experience some teething problems funds not being available on a card when the employee went to pay for goods , and whilst these have largely been resolved, payroll offices may still anticipate queries regarding prompt voucher issue.
The Belgians love voucher schemes and have two other offerings your company may come across. Again no employee contribution is required, and the provision of these vouchers may be mandatory under the terms of some collective bargaining agreements. When it comes to voucher scheme options, Hungary has Belgium beat. The Hungarian scheme is run by one organisation, Erzsebet Utalvany, and is much more ambitious than the simple provision of meal vouchers.
The scheme allows for vouchers to be provided under five broad headings: Food, Small Gifts e. The provision of the vouchers is free of tax and social security for the employee, but not all vouchers issued are tax-exempt to the employer. Each of the above categories will have elements that can be treated in one of three ways:.
5 Best Ways to Save Tax for Salaried Employees
The decision to provide voucher benefits and the type available is down to the employer. Many companies will set a budget for employees and allow them to choose how to spread that budget over the various categories. With over 60, participating employers and around 1. Extending well beyond Europe, many meal voucher schemes aim to encourage healthy choices or provide much needed income supplements for hard-working families.
India operates a scheme that allows employers to provide each employee with a voucher worth up to INR 50 per meal, free of tax and social security charges. With many employees working daily hours that allow two meals to be taken, this benefit could be worth around INR 2, per month. The main Indian voucher providers have recently moved to electronic systems, partly to counteract widespread misuse of the old system, whereby the vouchers would be used to pay for clothing or other consumer goods.
The scheme should be used only to purchase food and non-alcoholic beverages at registered food outlets and restaurants, and the electronic system makes it much easier for the voucher providers to keep track of usage. As already discussed, the Mexican system is focused primarily on achieving healthy eating outcomes.
The law requires the food and non-alcoholic beverages provided for to meet good diet and hygiene standards. The employer may either provide food at a work canteen, via the premises of a third party, or by the provision of meal vouchers. Vouchers may be issued in either paper or electronic format and must be used within 60 days of issue — with no cash change and usage on other commodities strictly prohibited.
Tax returns and compliance
One voucher may be issued for each working day, so attendance at work must be monitored and passed to the voucher issuer. While it is not mandatory for all employers to provide food or vouchers, if the scheme is offered, it must be given to the whole workforce. In the Greek press reported that the Labour Inspectorate was discovering a wide-scale abuse of the local system.
Controlling your voucher scheme and complying by the rules — particularly sticking to any tax-free thresholds and matching issued vouchers to actual days at work — and being able to prove that this has been done is essential.