Income tax exemption meal coupons
Restructure the salary Restructuring the salary and including certain components can go a long way in reducing the tax liability. Unlike eligible investments which lead to an additional cash outflow, restructuring the salary is a more 'efficient' means of claiming tax benefits. The following can form a part of one's salary structure: Food coupons like Sodexo and Ticket Restaurant; they are exempt from tax up to Rs 60, per year.
Medical expenses which are reimbursed by the employer are exempt up to Rs 15, per year. Transport allowance is exempt upto Rs per month. Claim tax benefits on house rent paid Salaried individuals can claim rent paid by them for residential accommodation, if HRA doesn't form part of their salary.
This deduction is available under Section 80GG and is least of the following:.
Meal Vouchers - Exempt From Tax Or Not?
Please note that the above deduction will be denied if the taxpayer or his spouse or minor child owns a residential accommodation in the location where the taxpayer resides or performs his office duties. Opt for a joint home loan As discussed earlier, the principal repayment on a home loan is eligible for a deduction of up to Rs , pa and the interest paid is eligible for a deduction of up to Rs , per year.
In cases where the home loan is for a substantial sum, it is not uncommon for the interest and principal repayment to exceed the stated limit.
To ensure that the tax benefit is optimally utilised, an individual can consider opting for a joint loan with his spouse or parent or sibling. This will ensure that both the co-owners can claim tax deductions in the proportion of their holding in the loan. The co-owner falling in the higher tax bracket should hold a higher proportion of home loan to ensure that the tax benefits are maximised.
Allowances are part of salary given to employees to meet some particular requirements such as house rent, conveyance, etc. Allowances may be fully taxable, partially taxable or fully exempt. Visit here for tax saving tips.
- What if the meal coupons are provided at a discounted rate and are not free?.
- Salary, Allowances, Perquisites & Exemptions;
- Food Coupons, Meal Vouchers Tax Exemption in India - AM22 Tech;
Example: Mayuresh, being an railway employee, had been provided quarters by Central Railways. However, since he retired from employment and occupying the quarters without permission from railways, this cannot be taxed as perquisite. The following perquisites are fully taxable in the hands of all employees receiving such perquisites:. The rent free accommodation provided to employees by their employer is taxable. Since the employees are provided rent free accommodation, the amount of income accruing to them cannot be determined by them.
Accordingly, there is prescribed manner for calculating income chargeable to tax as perquisite. The manner of calculating income chargeable to tax as perquisite for rent free accommodation is as follows:. Some employers provide the employees with accommodation at rates lower than normal market rates.
This reduction in rates is known as concession in rent. In this case, the amount is liable to be paid by the employee and the employer pays the same. Note: If the employer pays taxes on behalf on employees on non-monetary perquisites provided to them, then such taxes are exempt in the hands of the employee. The Companies in appreciation of its employees or with an aim to achieve a particular objective grants an option to the employees to subscribe equity shares at nil value or at concessional rates than the current market prices to its workforce.
If the employee exercises such option and subscribes to such shares at nil or concessional rates, then it forms part of perquisites. Note: If the shares have been received at a concessional rate then the amount paid to the employer company shall be deducted from the value of perquisite calculated as above. Shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity.
However, there would be no such perquisite to the employees of an airline or the railways. If the employee or any member of his household are provided with domestic servants such as sweeper, gardener, watchman or personal assistant then the benefits so received by the employee are taxable as perquisites in the hands of the employee. If the employer pays to the utility provider on behalf of the employee or if the employer himself provides such utilities then the benefits so received by the employee are taxable as perquisites in the hands of the employee.
If the employer provides free or concessional educational facilities from the educational institutions maintained and owned by the employer or if free educational facilities are allowed in any other educational institution then the benefits so received by the employee are taxable as perquisites in the hands of the employee.
However, if the educational institution is maintained and owned by the employer and the employer provides free or concessional education facilities to the employee himself or his children and the benefits so received by the employee does not exceed Rs. The value of the benefit to the employee as a result of interest-free loan or concessional loan for any purpose provided to the employee or any member of his household is a taxable perquisite.
However, this perquisite will be not be chargeable to tax in any of the following cases:. However, if the following are provided by the employer then they are not taxable in the hands of employees as perquisites:.
Gift or vouchers received by employees or by member of his household on ceremonies or occasions are taxable perquisites in the hands of the employees. However, if the value of such gifts in totality do not exceed Rs. If the employer reimburses expenses incurred by the employee or any member of his household using a Credit card then the benefits so received by the employee are taxable as perquisites in the hands of the employee. However, if such expenses are made by the employee exclusively for official purposes and the employer has documented the expenses incurred using the credit card then such reimbursements are not taxable as perquisite in the hands of the employees.
If the employer pays or reimburses for the periodic subscription of a club for the employee or any member of his household then the benefits so received by the employee are taxable as perquisites in the hands of the employee.
Free or subsidised meals that aren’t exempt
If movable assets such as laptops are provided by the employer to the employee then the benefits so received by the employees are not taxable in the hands of the employee. However, other movable assets such as furniture, car etc are provided by the employer to the employee than the the benefits so received by the employee are taxable as perquisites in the hands of the employee. If the employer transfers any movable assets such as computers and electronic items, motor cars etc.
The following perquisites are fully exempt from tax subject to compliance of conditions specified:. Pension means the employer provides to the employee a fixed monthly amount after his retirement in consideration of past services. Pension can also be called as annuity.
The employer provides the employee with monthly pension till the lifetime of the employee starting post retirement. Example: Manish worked for a company for past 20 years. After retirement the company pays him Rs. The employee may request his employer to pay him a lump sum amount of money on retirement rather than providing a monthly amount. This is known as commuted pension. Now Manish request the Company that instead of Rs. This is a case of commuted pension. In employment, the employer allows a few number of paid leaves to the employees.
If the employee fails to take leaves, then the employer may allow him to either accumulate the leaves for future or lapse the leaves. If the employee does not take such leaves then the balance of leaves accumulates. On retirement, the employer pays to the employee the salary that would accrue to him on the accumulated leaves. This is known as leave encashment. Leave Encashment is also known as leave salary. The compensation received is known as Retrenchment Compensation.
The employer provides such option to the employees in order to reduce his surplus workforce. If the employer pays Income-tax on behalf of the employee on non-monetary perquisites then such amount of Income-tax is exempt in the hands of the employee. Example: Suresh receives a motor car for his personal use from his employer. This is taxable in his hands as perquisite. As mentioned in the rule, the valuation of this perquisite is done taking the gross cost to the employer as reduced by an amount collected from the employee in this regards, i. This perquisite is tax free only to the extent of Rs.
It is very important to understand that one has to consider the working hours of the organization to calculate the tax-free amount of this perquisite. Sodexo coupons are actually paid vouchers referred in the proviso. This means it can also be used for buying groceries or any other thing sold by such hypermarkets. Hence, strictly going through the rule dealing with paid coupons, the intention of the legislature behind the said rule, sodexo or any other such prepaid coupon which is usable at places other than eating joints also are not tax free perquisite, in other-words are taxable perquisites.
However, if it is given as gift by employer to the employees and is not the part of the salary as perquisite, it can be considered as tax free provided its value is less than Rs. Author may be reached at ganatraneil gmail.
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