If you are a salaried person, you have a right to claim the benefits of an exemptions available on your few parts of the salary components given either in the form of ‘Allowances or Perquisites’. Here is the list given of most of the common exemptions which can be availed by a salaried person on his / her ‘Allowances or Perquisites’:
a) Actual HRA Received
b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)
c) Rent paid minus 10% of salary
* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission
Note:
i. Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent.
ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000.
a) First it occurs when shares are allotted to the employee after he has exercised his option on completion of the vesting period.
b) Secondly when the employee opts to sell the allotted shares.
Taxability under option (a)- It will be taxed as a perquisite and the difference of FMV (Fair market value) on the date of exercise of an option and the Exercise price will be counted as a perquisite u/s 17(2)(vi) of an Income Tax Act, 1961 and will reflect in your Form 16 under an annexure Form 12BA.
Taxability under option (b)- When an employee decides to 0sell the shares, its taxability will fall under capital gains which is the difference of sale proceeds and FMV of shares at the time of exercise of an option.
However, expenses on telephones including a mobile phone incurred by the employer on behalf of employee shall not be treated as taxable perquisite.
(Motor Car is owned or hired by the employer & running / maintenance expenses are reimbursed by the employer)
-Engine capacity upto 1600 cc = Rs. 1800/- p.m (plusRs. 900 per month, if chauffeur is also provided to run the motor car)
-Engine capacity above 1600 cc = Rs. 2400/- p.m (plusRs. 900 per month, if chauffeur is also provided to run the motor car)
Note:- Nothing is deductible in respect of any amount recovered from the employee.
(Motor Car is owned by the employee & running / maintenance expenses are reimbursed by the employer)
-Engine capacity upto 1600 cc = Actual expenditure incurred by employer less Rs. 1800/- p.m (plusRs. 900 per month, if chauffeur is also provided to run the motor car)
-Engine capacity above 1600 cc = Rs. 2400/- p.m (plusRs. 900 per month, if chauffeur is also provided to run the motor car)
Note:- Amount shall be further deducted in respect of any amount recovered from the employee.
Apart from the above- mentioned exemptions, taxpayer can be able to reduce their tax liability by opting for various investments schemes which qualifies for deduction from their taxable income. Here is the list given for most common tax savings plans which can work in the form of income savings along with a tax savings-
