Payroll - GST Registration, GST cancellation, GST Return Filing

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Payroll

Allowances

As per section 10(14), in case of following allowances (by whatever name called), exemption is lower of : 

(a) The amount of allowance, or,
(b) The amount spent for the purpose for which allowance is granted.

(1) Traveling allowance/Transfer allowance - Any allowance granted to meet the cost of travel on tour or transfer (including any sum paid in connection with transfer, packing and transportation of personal effects on transfer) is exempt under section 10(14).

(2) Conveyance allowance - Conveyance allowance granted to meet the expenditure on conveyance in performing official duty is exempt under section 10(14).

(3) Daily allowance - Any allowance granted to meet the ordinary daily expenditure incued by the employee on account of his absence from normal place of duty, due to tour or journey in connection with his transfer is exempt from tax under section 10(14).

(4) Helper allowance - Any allowance granted to meet the expenditure on a helper engaged for performing official duty is exempt from tax under section 10(14).

(5) Research allowance - Any allowance granted to meet the expenditure on academic research and other professional pursuits is exempt from tax under section 10(14).

(6) Uniform allowance - Any allowance granted to meet the expenditure on purchase or maintenance of uniform (for wearing during performance of official duty) is exempt from tax under section 10(14).

 (7) Driver Salary allowance - Driver Salary Allowance granted to meet the expenditure on driver salary in performing official duty is exempt under section 10(14).  

Download : Driver Salary Receipt for Claim.doc

Leave Travel Allowance (LTA)

 Exempt only travel in any place in India for 2 journeys in block of 4 calendar years with her spouse, dependent children, brother, sister & Parents. The current block is from Jan 2018 to Dec 2021

By Air= Economy fare of national carried by shortcut route, or actual fare whichever is lower is exempt.

Other than Air=A.C. first class rail fare by shortcut route or actual fare whichever is lower is exempt.

Note:

  • LTA can be claimed on actual travel cost only. All the mediums of the travel i.e road, rail or air are claimable under LTA. However, the employee must submit a valid proof of cost to claim the LTA. 
  • LTA can be claimed only on the travel expenses. Food or stay or entertainment or any such expenses cannot claim. 
  • LTA can only be claimed on domestic travel expenses. You cannot claim LTA on the expenses incurred during the international trip of the employee. 
  • Unclaimed LTA of previous block can be claimed in the first calendar year of the next block

 

Children's Education Allowance

Children's Education allowance is exempt upto Rs.100/- per child per month plus Rs.300/- per child per month for hostel expenses (max of 2 children only)

Gratuity

Govt. Employee = wholly tax-free

Others

If employee covered Gratuity Act: Exempt minimum of following after minimum 5 years jobs:
  • Actual gratuity
  • 15/26 x Last drawn Salary x No of completed years plus excess of six months
  • Rs.20 Lacs (w.e.f. 29 March 2018)

If employee not covered Gratuity Act: Exempt minimum of following
  • Actual gratuity
  • 15/30 x Average Salary of 10 months x No of completed years
  • Rs.20 Lacs (w.e.f. 29 March 2018)

Pension

If whole pension received together
  • If Gratuity received = Exempt one third amount of pension
  • If Gratuity not received =Exempt half amount of pension

If pension received monthly:  fully taxable

If pension received wife of his husband: it taxable income from other sources
Govt. Employee: wholly tax-free

VRS (Voluntary Retirement)

If employee finish 10 year in job exempt upto 5 Lacs. This exemption is only one time in whole life.

Leave Salary

Leave salary exempt least of following (if received in retirement):
  • Leave Salary (Up to 30 days per year)
  • 10 months of average salary of Basic+DA
  • Rs.3 Lacs
  • Actual Leave encashment received

 Govt. Employee = wholly tax free

House Rent Allowance

Exempt Least of following:
  • Rent Paid – 10% of Salary
  • Actual H.R.A
  • 50% of salary where residential accommodation is in Mumbai, Kolkata, Delhi or Chennai and 40% of at other place

Note

  • Salary means basic plus DA (if forming part of retirement benefits) plus commission (if fixed as a percentage of turnover).
  • If the taxpayer paying rent exceeding INR50,000 per month is required to deduct Tax Deducted at Source (TDS) at 5 percent
  • If the annual rent paid is more than Rs 1,00,000 p.a – It is mandatory to report the PAN of the landlord

Superannuation Employer Contribution

Exempt upto Rs. 1.50 Lacs

Perquisites

P.F.

Interest on PF is Non taxable.  If the employer pays interest higher than govt rate, the differential interest earned is treated as perquisites

Company Leased Accommodation

Accommodation is owned by the employer: Taxable 15% of salary without perquisites + 10% per annum of the cost of furniture without depreciation – Rent paid by employee.

Accommodation is taken on rent by the employer: Taxable actual rental paid by employer or 15% of salary whichever is lower

Furniture is hired from third party:  Actual hire charges taxable

Tips= Tax would be lower if employee pay rent directly & claim HRA deduction as compare to the company Leased Accommodation.

Sale of Movable Assets

Electronics Items
Taxable Value = (Total Value - 50% depreciation reducing balance method per year) – Amount received from employee

Motor Car  
Taxable Value = (Total Value - 20% depreciation reducing balance method per year) – Amount received from employee

Other
Taxable Value = (Total Value - 10% depreciation reducing balance method per year) – Amount received from employee

Motor Car

 Motor car is used wholly in office purposes: Tax free

Motor car used wholly in personal purposes: Taxable actual expenditure incued by the employer on running & maintenance of motor car including paid t chauffeur.

Motor car used partly in office & personal purposes: Taxable Rs. 1800/- per month if engine < 1.6 Liters, otherwise taxable Rs.2400/- per month. If chauffer is provided taxable (Rs.1800+900 & Rs2400+900).

If expenses on running & maintenance are fully met by the employee: Taxable Rs. 600/- per month if engine < 1.6 Liters, otherwise taxable Rs.900/- per month. If chauffer is provided taxable (Rs.600 + 900 & Rs 900+900).

Interest free/ Concession Loan

If loan amount is more than Rs.20k, than Difference of rate of interest charged by SBI per annum & interest rate charged by company is taxable. Waiver of Principle is also taxable.

Other Perquisites

Salary to sweeper, gardener, PA = Taxable

Gas, electricity, water expenses = Taxable

Free\ concessional education = Taxable

Company sponsored vacation = Taxable

Gift voucher = Tax-free up to Rs.5000/- p.a.

Club membership\ Annual fees on credit card (Other than official) = Taxable

Free food = Tax free up to Rs.50/- per meal during working hours.

Other amounts paid = Club fees paid on behalf of employee, insurance premiums paid on behalf of employee, income tax paid on behalf of employee are all treated as perquisites and its cost is added to income of employee.

Download Investment Declaration Form.xls
 

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