An overview of Tax Fee Perquisite for the salaried Taxpayers
Income Tax rules do permit tax-free perquisites, so salaried people can pay zero tax or less tax than they would otherwise pay.
The list of tax free perquisites is as under:
1) IT Section 10(14)- read with rule 2 BB(f) – Uniform allowance
Uniform Allowance- allowance for purchase /maintenance of formal dress for office work. Exempt up to actual without limit Bill required for purchases as proof
2) IT Section 10(14)- 2BB(e)-Books & Periodicals allowance- any subscription to business or technical magazines, weeklies and dailies- Exempt up to actual without limit. Bill required as proof.
3) IT Section 17(2)- read with rule 3 (2) – Vehicle owned by employees and used for official purposes Fuel and driver’s salary – Log book, fuel bills need to be maintained. The employer needs to endorse the log book kept by the employee that it is used for office purposes.
4) IT section 17(2) read with rule 3(2) – Vehicle owned by the employees, partly used for official purpose and partly for personal purposes
Limits: For cars -with engine capacity 1.6 L- Rs.1800 per month towards fuel+ Rs.900 towards driver’s salary.
For Cars with engine capacity 1.6 L , Rs.2,400 per month towards fuel+ Rs.900 per m month towards diver’s salary
5) IT Section 17(2)(viii) of the Income Tax Act, 1961 read with Rule 3(7)(iv) of the Income Tax Rules, 1962], an employer’s gift up to Rs. 5,000 per annum.
6) IT Section 10(14)- Meal allowance- Rs.26,400 per annum is exempt assuming 22 working days and provision for 2 meals.
7) IT section 17(2) read with rule (3) (7) ix)-communication- Landline and Mobile bills and internet charges of the employees (used for official purposes. Bills are required as proof.
8) Contribution by the employer for NPS- exempt up to 14% of the basic pay.
9) IT section- 10(14)- Helper allowance employed to help an employee in his official duties
10) IT section 10(14)- children’s education allowance up to Rs.100 per month per child subject to a maximum of 2 children
11) IT section 10(14) -children’s education allowance up to Rs.300 per month per child subject to a maximum of 2 children
12) IT section 10(17) (2) -read with rule 3(7)(vi)-subscription to gym and health clubs and sports facilities – Actual expenditure – no limits- recently added provision
13) – Fees of training in reputed institutions, cost of any Learning and development is fully exempt up to actuals- no limits.
14) Transport Allowance for handicapped, – up to Rs.3,200 per month.
The above exemptions are allowed under the old tax regime.
Salary structure can be designed to reduce that taxable income by incorporating above allowances and exemptions.
