Did you know that people who work for large Indian and multinational receive benefit just beyond salaries? Yes, it may include some lifestyle perks such as club membership and company accommodation.
The growth in business operations and competition for talent acquisition are now peaking in India. It is leading even the mid-sized organisations to offer perks other than salary.
However, the income tax regulations keep evolving, and it’s not clear to all whether these extras are tax effective or not. Some salary perks such as the mediclaim (does not qualify as the lifestyle perk), is an efficient benefit provided to employees.
You can also use the income tax calculator to calculate tax on salary perks. Some financial portals have this facility to help you know more.
In the same context, we have clubbed some company salary perks and how can they benefit you. Â
- Company Lease or Rent on Own?
An employee needs to choose the best options by measuring the aggregate tax benefits.
When you are opting for a company lease, the amount paid as rent by your employer gets deducted from your salary. As a result, your taxable income while filing form 16 gets trimmed to that extent.
Nonetheless, the pre-decided value of such accommodation is added to your taxable income. The value is lower of
- 15% of taxable salary excluding the perquisites’ value
- Actual rent paid by your organisation
On the other hand, for a self lease, you can ask for HRA exemptions. The tax HRA tax exemption is computed as the minimum of some conditions such as:
- Definite HRA on your Salary Slip
- 40-50% of the basic salary
- The rent figure deducted after 10% of the salary amount
Employees living in New Delhi, Mumbai, Kolkata and Chennai, have their HRA calculated at 50% of your salary. For all other cities and towns, it is 40% of the salary.
You need to calculate the net income tax benefit by using the income tax calculator India facility. It will help to find which the best way to receive a higher tax saving. If you observe that you are saving more via the HRA claim, it’s always better to go for personal accommodation.
- Driving a Company Car
Has your employer provided you with a car lease option? Then, you should consider availing of it as would work out to be a tax efficient option.
In all such cases, the EMI paid by the company to the car leasing company could be deducted from your salary. As a result, it could result in a decrease in the final taxable income.
All perquisite values are equal to Rs.1,800 per month if the car’s cubic capacity is up to 1,600. Cars with higher cubic capacity, the value could be Rs.2,400. What’s more, even Rs.900 per month gets added if you are also availing a chauffeur facility.
- Lifestyle Benefits
Corporate club membership subscription shares offered by an employer to assist you to join a club is treated a tax-exempt perquisite. If you have availed the facility for business purposes, you need to have the details related to all types of expenditures. The company will offer a certificate about the same to you.
Also, the food coupons’ provided by the company, which is usable only at eateries, are not liable for tax. The only thing is that the value of food coupons should not go beyond Rs.50 per meal.
You are now aware of how you can do some income tax planning on salary perquisites. You can also take the assistance of the online income tax calculator to compute taxes on salary and other details. You could also seek the help of a financial planner to assist you to dig deeper. Â Â