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06 May 2011
Hello sir...
i would like to know,if a employee has two options for his salary,1 is Rs.24000 p.m.and other is seperatly..basic=15000+HRA+LTA+FOOD COUPONS+ALLOWANCE=24000
in both cases salary amount is same,but i want to know which one is better as per income tax return..and why sir?..
please send me answer..
Thanking you
i would like to know,if a employee has two options for his salary,1 is Rs.24000 p.m.and other is seperatly..basic=15000+HRA+LTA+FOOD COUPONS+ALLOWANCE=24000
in both cases salary amount is same,but i want to know which one is better as per income tax return..and why sir?..
please send me answer..
Thanking you
07 May 2011
2nd case would be better as here from tax planning point of view, we have more alternates.
07 May 2011
Even in the second case. The HRA is allowed upto as per ceiling prescribed.
What is LTA? If it is Local Travel Allowance it is allowed upto Rs.800.00 per momth. Other t\2 items will be taxable. Hence there is no use for tax purposes in showing them separately But for staff who are covered under PF, the PF amount can be reduced by this segregation
What is LTA? If it is Local Travel Allowance it is allowed upto Rs.800.00 per momth. Other t\2 items will be taxable. Hence there is no use for tax purposes in showing them separately But for staff who are covered under PF, the PF amount can be reduced by this segregation
07 May 2011
second option is preferable because of following
1. For HRA you can get benifit upto least of folowing.
A) HRA recieved.
B) 40% of your Salary (i.e. Basic + DA). If you are in Mumbai, Delhi, Chennai or Kolkata then it is 50% of your salary.
C) Rent Paid in excess of 10% of your salary. (i.e. Rent - 10% of (Basic+DA))
2. if LTA (Local travel allowance) Rs 800 P.M.
IF LTA means (LTC) Leave Travel Concession then benifit will be subject to follwing
Leave Travel Allowance/Concession (LTA/LTC) is a monetary benefit that an employee gets from his employer for proceeding on leave to any place in India. LTA is exempt from tax, subject to certain conditions:
· The employee should take leave from his company
· S/he should actually travel
· The necessary travel documents must be submitted as proof that the travel has taken place
In order to claim the LTA benefit, you can travel alone or with your family. But your family cannot travel without you. “Family” includes your spouse, children, your dependent parents; and brothers and sisters (again, no limit specified), provided they are mainly dependent on you. It is not necessary for you to declare your dependent family members at the time of joining the company and neither does it depend on any specific company policies.
Below is a table that gives the amount of LTA you can receive depending upon your mode of travel:
Mode of Journey Amount of Fare you Receive
By Air
Economy class national carrier via shortest route.
By Railways
AC 1st Class Fare via shortest route.
By any other mode of Transport
If recognized public transport exists, then the 1st Class Deluxe fare; else an amount equivalent to the AC 1st Class Rail fare.
Note that accommodation, food, sightseeing, airport/rail transfers etc. are not covered under the LTA scheme. Only the above-mentioned transport cost is covered for exemption.
Important: LTA exemption is available only for journeys undertaken within India.
There are 2 ways you can receive the LTA benefit:
1. Monthly salary:
Here, the allowance is credited to you along with other components of your salary whether or not you actually take leave and travel. To save tax on that amount, you need to submit documentary proof of travel undertaken while on leave failing which, your LTA for the whole year will be taxed.
2. Reimbursement:
Here, you first travel while on leave and preserve relevant documents. You need to submit them once you return. Your employer will them reimburse the applicable amount in the next payment cycle or as per company rules.
LTA can be claimed only twice in a block of 4 calendar years. These blocks are fixed by the government. The present blocks are 2006-2009 (i.e. January 1, 2006 to December 31, 2009). If the employee fails to avail the exemption in a particular block, he can avail the same in the next block of four years, as a “carry over” option. But he should avail of one in the first year of the next block. Also, you cannot claim more than one LTA benefit in a calendar year. Interestingly, you can claim LTA exemption from your previous employer too, if you have not utilized the benefit there (so long as it is claimed within the same block of 4 years).
1. For HRA you can get benifit upto least of folowing.
A) HRA recieved.
B) 40% of your Salary (i.e. Basic + DA). If you are in Mumbai, Delhi, Chennai or Kolkata then it is 50% of your salary.
C) Rent Paid in excess of 10% of your salary. (i.e. Rent - 10% of (Basic+DA))
2. if LTA (Local travel allowance) Rs 800 P.M.
IF LTA means (LTC) Leave Travel Concession then benifit will be subject to follwing
Leave Travel Allowance/Concession (LTA/LTC) is a monetary benefit that an employee gets from his employer for proceeding on leave to any place in India. LTA is exempt from tax, subject to certain conditions:
· The employee should take leave from his company
· S/he should actually travel
· The necessary travel documents must be submitted as proof that the travel has taken place
In order to claim the LTA benefit, you can travel alone or with your family. But your family cannot travel without you. “Family” includes your spouse, children, your dependent parents; and brothers and sisters (again, no limit specified), provided they are mainly dependent on you. It is not necessary for you to declare your dependent family members at the time of joining the company and neither does it depend on any specific company policies.
Below is a table that gives the amount of LTA you can receive depending upon your mode of travel:
Mode of Journey Amount of Fare you Receive
By Air
Economy class national carrier via shortest route.
By Railways
AC 1st Class Fare via shortest route.
By any other mode of Transport
If recognized public transport exists, then the 1st Class Deluxe fare; else an amount equivalent to the AC 1st Class Rail fare.
Note that accommodation, food, sightseeing, airport/rail transfers etc. are not covered under the LTA scheme. Only the above-mentioned transport cost is covered for exemption.
Important: LTA exemption is available only for journeys undertaken within India.
There are 2 ways you can receive the LTA benefit:
1. Monthly salary:
Here, the allowance is credited to you along with other components of your salary whether or not you actually take leave and travel. To save tax on that amount, you need to submit documentary proof of travel undertaken while on leave failing which, your LTA for the whole year will be taxed.
2. Reimbursement:
Here, you first travel while on leave and preserve relevant documents. You need to submit them once you return. Your employer will them reimburse the applicable amount in the next payment cycle or as per company rules.
LTA can be claimed only twice in a block of 4 calendar years. These blocks are fixed by the government. The present blocks are 2006-2009 (i.e. January 1, 2006 to December 31, 2009). If the employee fails to avail the exemption in a particular block, he can avail the same in the next block of four years, as a “carry over” option. But he should avail of one in the first year of the next block. Also, you cannot claim more than one LTA benefit in a calendar year. Interestingly, you can claim LTA exemption from your previous employer too, if you have not utilized the benefit there (so long as it is claimed within the same block of 4 years).
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