Enhancing Take-Home Pay of Your Team: Leveraging Tax Savings Alongside CTC Increment

In addition to offering a raise in the Cost to Company (CTC), employers should consider enhancing employees' take-home pay by facilitating the utilization of tax-saving options. By encouraging employees to make the most of tax-exempt allowances and benefits such as food coupons, reimbursement of expenses, and house rent allowances, employers can effectively boost their employees' in-hand salary. This approach not only benefits the employees by increasing their disposable income but also demonstrates a commitment to their financial well-being. Employers can further support their employees by providing guidance on how to maximize these tax savings options, ensuring that they receive the full advantage of their compensation package.

Here's a guide to some of the key allowances and benefits that you can offer to employees in CTC :

Leave Travel Allowance: LTA can be used to travel for vacation with family within India. The travel costs (by road or air) are reimbursed against submission of actual bills. The unclaimed amount is taxable. LTA can be claimed twice in block of four years.

Fuel and Travel Expenses: Employees who need to travel for work can claim reimbursement of travel or fuel expenses. However, they must submit actual bills. For workers within office jobs there is a limit of Rs. 2,400 on fuel allowance to help them commute between work and home.

Vehicle Maintenance and Driver Salary: Employees can claim allowance for the maintenance of the vehicle they use for official work and the salary of a driver. The limit is Rs. 3,300 per month under this head.

Telecommunication Reimbursements: Reimbursement of landline, internet and mobile phone bills is exempt from tax against submission of actual bills. This perk assumed importance during the work-from-home phase after Covid.

Meal Coupons: Food allowance of Rs. 50 per meal is tax free. Assuming two meals in 22 working days in a month, this works out to Rs. 2,200 per month. This money can be spent on meals and non-alcoholic beverages.

Books and Periodicals: The reimbursement of books, journals and newspaper bills are also tax exempt if supported by actual bills. This also includes online subscriptions of newspapers and

Learning and Development: Some companies are ready to foot the costs incurred on online or offline courses that enhance the skills of the worker. This is tax free on submission of actual bills.

Uniform Allowance: Looking smart and dressing well are hygiene factors at the workplace. Some companies an allowance for purchasing clothes to be worn at work. Actual Bills are needed for claiming this.

Scholarship Fund: To encourage meritorious children of employees, companies may also give a monthly sum or an annual scholarship. The money under this head is meant only for education related expenses such as tution fee, books and study material.

By understanding and leveraging these tax-exempt allowances and benefits, you can maximize employees tax savings and increase their take-home salary. Make sure to consult with a tax advisor or financial planner to make informed decisions.