SAIL-ISPPAY SECTION

PRESENTED BY:

SURESH SIVARAMANSR. MANAGER (FIN)-PAY

06-01-2010

REMUNERATION Salary Perquisites As they existedConsequent upon abolition of FBTNotification No. 94/2009/F.NO. 142/25/2009-S O(TPL) Dated 18-12-09 Profits in lieu of salary (VR comp)

VERY VERY TASTY

CAFETERIA APPROACHCircular No. PL/OD/32/1824Dated 31-12-2009

SET OF PERQUISITESConveyance/Transport (5%)Lunch/Meal coupon (1-5%)Entertainment expenses(5%)Newspaper /Professional literature reimbursement (5%)Education expenses [Schools-5%,College-8%,UG/PG/Prof -10%]Hostel subsidy (5%)`Internet/communication (5%)Professional body allowance (2%)House upkeep allowance (3%)Gardener allowance (3%)Uniform allowance (5%)Self development allowance (10%)Washing allowance (2-3%)LTC/LLTC (15%)Reimbursement of vehicle repair & maintenance (5%)

PERQUISITES/ALLOWANCES 15 different items Perks 46% (48 hours per week or more) Perks 44% (less than 48 hours per week) Percentage flexibility only under: Lunch/Meal coupon (1-5%) Washing allowance (2-3%)

PAYMENT TERMS Executive has to give his option Last Date for submitting option = 10.01.10 Option has to be exercised every year Option cannot be changed during the year No option- No perks (44% - 46%) Earlier related circulars stand withdrawn Payment- on certification basis Suspension, EOL cases not eligible Taxability as per rules

BEST CHOICES?No generalised guideline can be provided for exercising the options as the need and requirements will vary from individual to individual.

Only primary consideration should be whether one can maintain sufficient authentic documents and produce them before the I.T.O. in case of scrutiny.

TAXABILITY Perks under cafeteria approach which are specifically mentioned in present and earlier government notifications.

Perks under cafeteria approach which are covered in the notification under value of any other benefit or amenity.

CONVEYANCE/TRANSPORT(we are dealing with the more prevalent cars up to 1.6cc capacity)[5%]Use of one or more cars owned or hired by employerUse of one Motor car owned/hired by employerCar owned by employeeTwo wheelerTransport allowance

Use of motor car-(a)Car owned/hired by employerEmployee uses more than one carUsage both official and privatePerks value:One car- Rs.1800 p.m. (+ Rs.900 for chauffeur)PLUS the following for 2nd carExpenditure on running & maintenanceRemuneration of chauffeurNormal wear & tear- 10% of cost of car

Use of motor car-(b)Car owned/hired by employerUsage both official and privatePerks value:Rs.1800 p.m. (+ Rs.900 for chauffeur)

Use of motor car-(c)LTECar owned by employeeUsage both official and privatePerks value:Actual expenditure incurred by employerLESS Rs.1800 (+ Rs.900 for chauffeur)

Use of motor car-(d)Employee owns a two wheelerUsage both official and privatePerks value:Actual expenditure incurred by employerLESS Rs.900

Use of motor car-(e)Transport allowance

EXEMPTIONRs.800 p.m.Rs.1600 p.m. for handicapped

GARDENER ALOWANCE[3%]Actual cost to employerLESSAmount paid by the employee for such service

LUNCH/MEAL COUPON[1-5%] Cost to employer for providing Food and non-alcoholic beveragesLess amount recovered from employeeEXEMPTIONSFood/beverages provided during working hours Non-transferable paid vouchers up to Rs.50/- per meal, per day

HOSTEL SUBSIDYEXEMPTION

Rs.300 p.m. per child Maximum 2 children

UNIFORM ALLOWANCEEXEMPT to the extent such allowance is spent for official purpose.There should be an established requirement of uniforms for official work- Security department- CET/RDCIS offices etc.- Nurse

OTHERSCost to employer based on arms length transactionLESSAmount recovered from employeeEXEMPTIONExpenses on telephone,mobile on behalf of the employee are not to be taxed.(Arms length transaction: transaction between two un-related parties so as to avoid any discriminating practice)

SUMMATIONE.g. An employee gets gardener allowance of Rs.1200 p.m. by certifying to the employer about the expenses ; but on survey, he is unable to prove any disbursement to any person (gardener). The total amount received by him will become taxable and he will be subjected to penalty by the ITO.The employee should not only certify the expenditure on different heads, but he must also ensure that he spends the money for the purpose for which he has claimed.