07/04/2015
IS YOUR SALARY PACKAGE TAX EFFICIENT..??
Make your salary package tax-efficient by
planning your income tax well.
For income tax planning, you can structure your
pay package so that it includes various tax-free
payments rather than getting it all as basic salary.
Some of the common payments are:
• House rent allowance (HRA)
• Transport allowance
• Reimbursement of medical expense, hotel bills,
foreign travel of spouse, and books
• Car provided by company
• Food coupons
• Leave travel concession (LTC)
Your EPF (employee provident fund) contribution
is at your discretion; you may adjust it
depending on your other investment needs. It is a
good idea to raise your employer's contribution up
to 12% of your salary, as it is exempt from tax.
Though you get tax benefit on certain allowances
mentioned above, all perquisites are taxable
as normal salary. Some common perquisites which
are taxable as normal salary are:
• Loan at an interest rate lower than SBI PLR
• Rent-free accommodation
