TAXABILITY OF RETRENCHMENT COMPENSATION & VRS COMPENSATION Additional compensation/ severance pay given by employer is taxed as 'profits in lieu of salary'. But gratuity, retrenchment compensation or VRS is tax exempt in certain cases. With reduction in revenues due to Covid-19, many businesses are offering pink slips to employees. #TAXABILITYOFRETRENCHMENTCOMPENSATIONVRSCOMPENSATION

LEAVE TRAVEL CONCESSION/ASSISTANCE (LTC/LTA) LTA or Leave Travel Concession (LTC) is paid by the employer to employees, wherein they grant the employees leave while bearing all travel expenses, and additionally, the employee also gets to save tax. #LEAVETRAVELCONCESSIONASSISTANCE

MEDICAL TREATMENT OUTSIDE INDIA Any expenditure incurred by the employer on treatment of employee or or his family member outside India shall be tax free perqisite: Medical treatment of the employee or any family member: Exempt to the extent permitted by RBI. #TREATMENTOFMEDICALFACILITIES

TREATMENT OF MEDICAL FACILITIES (In India) - Proviso to Section 17(2) Perquisites Valuation of Medical Facilities [Proviso to Section 17(2)] Employer's hospital/Government hospital/approved hospital - The perquisite in respect of medical facility provided by an employer in the following hospitals/clinic is NOT Chargeable to Tax— ... Health insurance premium - ... Any other facility in India - #TREATMENTOFMEDICALFACILITIES

MISCELLANEOUS POINTS WRT PERQUISITES What are the taxable perquisites? While there are tax-free perquisites such as rent free accommodation, supply or water or gas, taxable perquisites include education for children, domestic help's service etc #MISCELLANEOUSPOINTSWRTPERQUISITES

Taxability of Furniture Provided to Employees along with ,Accommodation Accommodation, either rent-free, or with a minimal amount of rent, is one of the important p erquisites given to employees. ... These benefits are knows as perquisites and are taxable as per the provisions stated in the Income Tax Act. Perquisites are usually provided by the employee in kind rather than in monetary form #TaxabilityofFurnitureProvidedtoEmployeesalongwithAccommodation

What is Perquisites And its Taxability “Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. “Perquisite” is defined in the section 17(2) of the Income tax Act as including: (i) Value of rent-free/concessional rent accommodation provided by the employer. #WhatisPerquisitesAnditsTaxability

CERTAIN DEDUCTIONS UNDER SECTION 16 Section 16, inter-alia, provides for certain deduction in computing income chargeable under the head “Salaries”. it is proposed to allow a standard deduction upto Rs 40,000/- or the amount of salary received, whichever is less. #CERTAINDEDUCTIONSUNDERSECTION16

Types of Official Allowances Some of the popular allowances that belong to this category are: Entertainment Allowance. ... Overtime Allowance. ... Dearness Allowance (DA) ... Meal Allowance. ... City Compensatory Allowance (CCA) ... Interim Allowance. ... Cash Allowance. ... Servant Allowance. #TypesofOfficialAllowances

SPECIAL ALLOWANCE Special allowance for residents living in hilly areas, scheduled areas and agency areas. Available in Madhya Pradesh, Uttar Pradesh, Karnataka, Odisha, Assam, Tamil Nadu and Tripura. The maximum exemption is Rs. 200 per month. #SPECIALALLOWANCE

Calculation of Retirement Benefits Salary (15 X last drawn salary X tenure of working) divided by 30 As per the government's pensioners' portal website, retirement gratuity is calculated like this: one-fourth of a month's basic pay plus dearness allowance drawn before retirement for each completed six monthly period of a qualifying service. #CalculationofRetirementBenefitsSalary

HOUSE RENT ALLOWANCE ('HRA') Section 10(13A) & Rule 2A 0(13A) House rent allowance (HRA) is received by the salaried class. A deduction is permissible under Section 10(13A) of the Income Tax Act, in accordance with Rule 2A of the Income Tax Rules. You can claim exemption on your HRA under the Income Tax Act if you stay in a rented house and get a HRA from your employer. #HOUSERENTALLOWANCE

TAXABILITY OF ALLOWANCES This is a partially taxable allowance given to employees posted in tribal areas of Madhya Pradesh, Tamil Nadu, Uttar Pradesh, Karnataka, Tripura, Assam, West Bengal, Bihar and Orissa. ... Any amount received as an allowance under this head in excess of the prescribed limit is fully taxable #TAXABILITYOFALLOWANCES

Steps for Computation of Relief Available Under Section 89 Step 1: Firstly, calculate the tax due in the current year by including the arrears in your total income. Step 2: Now calculate the tax due in the current year by excluding the arrears from your total income. Step 3: Compute the difference of the two figures of Step 1 & 2 and let's call that difference as 'X'. #StepsforComputationofReliefAvailableUnderSection89

Meaning of Arrears of Salary Arrears (or arrearage) is a legal term for the part of a debt that is overdue after missing one or more required payments. ... Employees' salaries are usually paid in arrear. Payment at the end of a period is referred to by the singular arrear, to distinguish from past due payments. #MeaningofArrearsofSalary

Profits in Lieu of Salary Any amount of compensation received by an employee from his employer or former employer in connection with the termination of employment or modification of terms and conditions of employment is regarded as profits in lieu of salary. #ProfitsinLieuofSalary

Some important facts about Salary under Taxation Salary paid tax-free-If salary is paid tax free by employer, then the employee has to include in his taxable income not only salary received but also amount of tax paid by employer. There is no difference between whether the tax paid under terms of contact by the employer or employee #SomeimportantfactsaboutSalaryunderTaxation

Definition of Word 'Salary' or Income by way of Salary [Section 17(1)] ... any advance of salary; any payment received by an employee in respect of any period of leave not availed of by him; (Leave encashment or salary in lieu of leave);

TAXATION OF SALARY INCOME - INTRODUCTION Salary accrues where the services are rendered even if it is paid outside India; Salary paid by the Foreign Government to his employee serving in India is taxable under the head Salaries; Leave salary paid abroad in respect of leave earned in India shall be deemed to accrue or arise in India #TAXATIONOFSALARYINCOME

INCOME DEEMED TO ACCRUE/ARISE IN INDIA - Section 9 Chapter ii : Income sought to be taxed under Section 9(v), (vi) and (vii) of the Income tax Act, 1961 by employing the Source Rule. By the Government: Any form of Income in the form of Interest, Royalty or Fees for technical services are deemed to be income that accrue or arise in India and can be taxed. #INCOMEDEEMEDTOACCRUEARISEININDIASection9

Meaning of residential status Residential status is a term coined under Income Tax Act and has nothing to do with nationality or domicile of a person. An Indian, who is a citizen of India can be non-resident for Income-tax purposes, whereas an American who is a citizen of America can be resident of India for Income-tax purposes #MeaningOFresidentialstatus

TAX RATES FOR THE A.Y. 2020-21 Income Tax Slabs Tax Rates Up to ?3,00,000 Nil Within the tax bracket of ?3,00,000 to ?5,00,000 5% Within the tax bracket of ?5,00,001 to ?10,00,000 ?10,000 + 20% of total income exceeding ?5,00,000 Above ?10,00,000 ?1,10,000 + 30% of total income exceeding ?10,00,000 #TAXRATES