Business
How to cut tax outgo by over Rs 1 lakh! From LTA & travel reimbursements to meal coupons and driver salary – top 10 perks you shouldn’t miss
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Tax tips to cut your tax outgo: It’s the end of the financial year and within months it will be time to file your income tax return for financial year 2023-24 (AY 2024-25). If you are looking to reduce your tax outgo, then it’s important to take note of certain perks that you can avail (depending on the benefits your employer offers!)
For a taxpayer falling in the 30% tax bracket, availing just 7-8 of the 10 perks listed below can help potentially slash the annual tax liability by over Rs 1 lakh.One important thing to note is that while certain perks have predefined limits, the amounts claimed for others should be justifiable. Receipts or bills are essential for claiming tax exemptions. Let’s take a look at 10 perks to cut tax as listed by ET Wealth:
1. Leave travel allowance: The Leave Travel Allowance (LTA) allows employees to travel within the country for a vacation with their family. Reimbursement of travel expenses, including road, rail, or air travel, is granted upon submission of actual bills. It is important to note that the unclaimed amount is subject to taxation, and employees can avail of LTA twice within a block of four years. The annual tax-free limit for LTA stands at Rs 1,00,000.
2. Fuel and travel expenses: For those who need to travel for work purposes, reimbursement of travel and fuel expenses is available. Employees must provide actual bills to claim this allowance. Sedentary workers with office jobs have a fuel allowance limit of Rs 2,400 to facilitate commuting between work and home. The annual tax-free limit is Rs 28,800.
3. Vehicle maintenance and driver salary: Employees can claim an allowance for vehicle maintenance and driver salary that they use for official purposes, with a monthly limit of Rs 3,300. The annual tax-free limit is Rs 39,600.
4. Telecommunication reimbursements: Reimbursement of telecommunication expenses, including landline, internet, and mobile phone bills, is tax-exempt against the submission of actual bills, up to Rs 36,000 annually.
5. Meal coupons: Meal coupons for a tax-free food allowance of Rs 50 per meal are provided, amounting to Rs 2,200 per month for two meals during working days. The annual tax-free limit is Rs 26,400.
6. Books & Periodicals: Reimbursement for books, journals, newspapers, and online subscriptions is tax-free, supported by actual bills, with an annual limit of Rs 24,000.
7. Learning and development: Companies may also cover the costs of online or offline courses for employee skill enhancement, tax-free upon bill submission, up to Rs 48,000 annually.
8. Uniform allowance: Maintaining a professional appearance is crucial in the workplace, and some employers provide an allowance to cover the cost of work attire. To claim this allowance, employees must provide receipts as proof of purchase. The annual tax-free limit is Rs 24,000.
9. Gadgets and moveable assets: This perk gained popularity during the work-from-home period. Companies purchase items under their name and provide them to employees for personal use. The annual tax-free limit is Rs 60,000.
1o. Scholarship fund: Companies may provide a monthly or annual scholarship to support the education of deserving children of employees. This financial assistance is designated specifically for education-related costs like tuition fees, books, and study materials. The annual tax-free limit is Rs 60,000.
For a taxpayer falling in the 30% tax bracket, availing just 7-8 of the 10 perks listed below can help potentially slash the annual tax liability by over Rs 1 lakh.One important thing to note is that while certain perks have predefined limits, the amounts claimed for others should be justifiable. Receipts or bills are essential for claiming tax exemptions. Let’s take a look at 10 perks to cut tax as listed by ET Wealth:
1. Leave travel allowance: The Leave Travel Allowance (LTA) allows employees to travel within the country for a vacation with their family. Reimbursement of travel expenses, including road, rail, or air travel, is granted upon submission of actual bills. It is important to note that the unclaimed amount is subject to taxation, and employees can avail of LTA twice within a block of four years. The annual tax-free limit for LTA stands at Rs 1,00,000.
2. Fuel and travel expenses: For those who need to travel for work purposes, reimbursement of travel and fuel expenses is available. Employees must provide actual bills to claim this allowance. Sedentary workers with office jobs have a fuel allowance limit of Rs 2,400 to facilitate commuting between work and home. The annual tax-free limit is Rs 28,800.
3. Vehicle maintenance and driver salary: Employees can claim an allowance for vehicle maintenance and driver salary that they use for official purposes, with a monthly limit of Rs 3,300. The annual tax-free limit is Rs 39,600.
4. Telecommunication reimbursements: Reimbursement of telecommunication expenses, including landline, internet, and mobile phone bills, is tax-exempt against the submission of actual bills, up to Rs 36,000 annually.
5. Meal coupons: Meal coupons for a tax-free food allowance of Rs 50 per meal are provided, amounting to Rs 2,200 per month for two meals during working days. The annual tax-free limit is Rs 26,400.
6. Books & Periodicals: Reimbursement for books, journals, newspapers, and online subscriptions is tax-free, supported by actual bills, with an annual limit of Rs 24,000.
7. Learning and development: Companies may also cover the costs of online or offline courses for employee skill enhancement, tax-free upon bill submission, up to Rs 48,000 annually.
8. Uniform allowance: Maintaining a professional appearance is crucial in the workplace, and some employers provide an allowance to cover the cost of work attire. To claim this allowance, employees must provide receipts as proof of purchase. The annual tax-free limit is Rs 24,000.
9. Gadgets and moveable assets: This perk gained popularity during the work-from-home period. Companies purchase items under their name and provide them to employees for personal use. The annual tax-free limit is Rs 60,000.
1o. Scholarship fund: Companies may provide a monthly or annual scholarship to support the education of deserving children of employees. This financial assistance is designated specifically for education-related costs like tuition fees, books, and study materials. The annual tax-free limit is Rs 60,000.
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