HOW TO INCREASE TAKE HOME SALARY –CASE OF FIXING THE SALARY PACKAGEWITH SPECIFIC REFERENCE TOPERQUISITESGroup No. 1Rakesh ThakralS.KaziPrasad KYogeshVenkataramanaAsim Khan
Tax planning – Salaried Income Conceptually, tax planning for salaried assessees can be divided into two broad categories namely: Salary Restructuring; and Investing in Tax saving devices
Tips to Optimize your take home salary Ask your employer to restructure your salary package and give salary in the form of following important perquisites Leave Travel concession Medical Reimbursement Company Lease v/s Self Rent Reimbursement towards car running and Maintenance Gift Voucher
Tips to OPTIMISE your take-home salary Leave travel concession There was no maximum claim limit on LTC provisioned by the income tax law Two trips in a block of 4 years are allowed (current block being 2010- 2013) for exemption. While for all income tax purposes one uses the financial year ending March 31, for LTC one would use the calendar year ending December 31.
Tips to OPTIMISE your take-home salaryMedical Reimbursement:Medical expenses reimbursement maximum of Rs 15,000 per annum isallowed; medical bills are to be produced for the same
Tips to OPTIMISE your take-home salary Company Lease Vs Self Rent In case of a company lease, the amount of rent paid by your employer is deducted from your salary and hence your taxable income reduces to that extent. However, perquisite value of such accommodation is added to your taxable income. Perquisite value is the lower of 1) 15% of taxable salary excluding the value of perquisites; or 2) Actual rent paid by the company. For a self lease, on the other hand, you can claim HRA exemption. The tax exemption on HRA is computed as the minimum of following three conditions: i) Actual HRA on your pay slip; ii) 40-50% of your basic salary; iii) The rent amount minus 10% of the salary. If you stay in any of the metros (Mumbai, Kolkata, New Delhi or Chennai), HRA is calculated at 50% of your salary. In other cities/towns, HRA is calculated at 40% of the salary.
Tips to OPTIMISE your take-home salary -cont….Company Lease Vs Self Rent:- You have to calculate the net tax benefit under both the options to find which gives you a higher tax saving. “If you are saving more through your HRA claim, then it’s better to opt for a personal accommodation. On the other hand, despite the addition of perquisite, if the overall taxable income is lowered because of company accommodation,
Tips to OPTIMISE your take-home salaryDriver Salary and Car MaintenanceReimbursement towards car running and Maintenance and driver salary usedfor personal and official purpose –( Car Owned by employee used for officeand personal)Reduction of Taxable Income Rs. 32400 P.A ( 1800 plus 900 per month)
Tips to OPTIMISE your take-home salaryGift Free voucherGift Voucher up to 5000/- is Tax free perquisite
One more way to understand prerequisite usage toincrease take home salaryMr. P.Joshi requested his company to restructure his salary break up. Before restructuring thebasic salary was Rs. 40000 per month i.e. 4.80 Lacs P.A; he has requested that his basic bereduced and some other components be added to his salary other than the HRA. Below are thecomponents and their amounts