My annual CTC package includes specific flexi pay components, apart from the fixed monthly payments. How are the flexi components beneficial, and how are they taxed?
An employer provides various flexi components, which an employee can claim based on the actual expenditure incurred by them. Such components include:
Employees should submit the bills or invoices to their employer. The employer then grants the tax-exemption based on the documentary proof provided by the employees.
In case any of the components or allowances remain unclaimed at the end of the financial year, the employer pays the balance after deducting tax (TDS).
Also Read: Tax Query: Can I claim capital gains exemption on investments in bonds?
I had a transfer in employment from Chennai to another office of my company located in Hyderabad. For relocation, my employer provided a relocation allowance of Rs 1 lakh. The reimbursement includes airfare and transport expenses for my belongings, amongst other costs on relocation. Is the relocation allowance taxable?
A relocation allowance provided by your employer is tax-exempt to the extent of expenses incurred by you. The expenses include:
You should maintain the documents, invoices and bills for the expenses and submit the same to your employer. The relocation allowance exceeding the costs is taxable as salary.
For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in
I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.
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