Income Tax Provisions guidelines FY 18

1. House Rent Allowance:

Eligibility:

As per the entitlement mentioned in the letter of appointment. The calculation per say is done
based on the factors below and the least of them is exempt from tax:
Actual HRA received
40% (in case of Non Metro) or 50% (in case of Metro) of Salary
Rent Paid 10% of Salary
* Salary refers to Basic Salary + DA if paid.

Mode of Claim:

If rent paid is <3000 p.m. original House Rent receipt with duly signed by the landlord
If rent paid is >3000 p.m. copy of the House Rental agreement and copy of Landlords
PAN.
Rental agreement has to be in the name of employee.
2. Medical Reimbursement:

Eligibility:

As per the entitlement mentioned in the letter of appointment. Medical reimbursement can be
claimed by the employee for the expenses incurred on self and dependents (parents, spouse
& two children).
The same is exempt upto Rs. 15,000/- per annum (Rs. 1,250/- per month) on the production
of original & genuine bills with prescription (in case of Ayurvedic/Homeopathy/Siddha
medicines)

Mode of Claim:

Tax exemption is based on only Original Bills (photocopies are not allowed).
The bills should be in the name of employee, spouse, dependent children (two) and
dependent parents.
All Medical Expenses including expenses on dental care and eye care can be claimed
for tax exemption (expenses on general items like Cosmetics, Baby Foods etc., are
not eligible for exemption)
Expenses incurred for spectacles (only for lens) /contact lenses are also exempted,
provided they are supported by a doctors prescription.
The bills should be for the current financial year only.
3. Leave Travel Allowance (LTA)

Eligibility:

Employees in grade 26 and above are entitled. Leave Travel Allowance (or LTA in short) is
an allowance granted by employers to meet the employees travel expenses during the year.
The entitlement for the LTA is as per the band structure or bills (in original) produced
whichever least is exempt.
The leave availed should be earned leave of a minimum of 3 calendar days which starts with
a working day and should cover the period for the receipts produced. The current block being
2017 2020.

The LTA and the Income Tax Implications

The amount that is paid out has tax exemptions subject to certain conditions. Section 10(5)
of the Income Tax Act, entitles full exemption in respect of the value of the allowance received
from the employer, only when:

Amount is spent for self and family: The amount eligible for exemption should be for travel
with family, with you as the co-traveler. By family here is meant spouse, up to a maximum of
two children (multiple births after one child is accepted), parents, brothers and sisters who
are wholly dependent on you.

Amount is claimed for travelling only: The exemption is only for expenses on travelling,
either by road, rail or air, within the country. The traveling expenses should be only for the
primary mode of travel from home city to destination city. All expenses incurred on hotel
rooms, sightseeing, food, taxi fare, auto fare, porter charges etc are excluded.

Travel expenses are for the shortest route only: The exemption is available in respect to
the shortest possible route. In case the journey is performed from the place of origin to
destination in a circular or any other manner, then the exemption for that journey will be limited
to the shortest route from the place of origin to destination. For air travel, the maximum
amount that can be claimed as exemption is the economy class air fare. For rail or road, the
maximum amount that can be claimed as exempt is the air conditioned first class rail fare to
your destination by the shortest route.
LTA and the Block of Four Years You could claim LTA exemption in respect of any two
journeys in a block of four years. The current block is 2017 to 2020. Say for example, you
claim LTA exemption in 2017, then you could claim just one more till 2020. An important thing
to keep in mind here is that, the four years are calendar years and not financial years.

In case you dont make a claim in the current block In case you dont avail of the LTA
exemption in a particular block, whether for both the journeys or for one journey, then you
could carry forward one journey to the first calendar year in the next succeeding block of four
years. Thus, in the next block of four years, you could claim the carried forward travel, plus,
two journeys of that particular block i.e. a total of 3 exemptions.

Proofs to be submitted:
For Road Travel Original fuel receipts, toll receipts, taxi receipts and bus tickets as
applicable.
For Rail Travel - Print out of the ticket.
For Air Travel Print out of the ticket and original boarding pass
Travel plan and dependent declaration mandatory.
4. Gifts:

The value of any gift, or voucher, or token in lieu of which such gift may be received by the
employee or by member of his household on ceremonial occasions or otherwise from the
employer, shall be determined as the sum equal to the amount of such gift.
The perquisite is taxable. Where, however, the value of such gift, voucher, or token, as the
case may be, is below Rs. 5,000 in the aggregate during the previous year, the value of
perquisites shall be taken as Nil.

Gifts in cash or convertible into money (like gift cheque) are fully taxable
Gift in kind up to Rs. 5,000 in aggregate per annum would be exempt, beyond which
it would be taxable.

5. Education Allowance:

Entitlement: As per the entitlement mentioned in the letter of appointment/Salary revision

letter. Education allowance is provided to all married employees having school going children.

Mode of Claim: Bills submission is not required for availing this exemption however a self-
declaration by the employee of having school going children, given at the beginning of the
year, will entitle the employees for the allowance which is tax exempt. The exemption is upto
Rs.100 per child per month to a maximum of 2 children.
6. Vehicle Maintenance
Eligibility:

As per the entitlement mentioned in the letter of appointment. As per grade-wise entitlement,
employees can produce vehicle maintenance bills and claim the exemption.

Nature of Exemption Vehicle < 1600 cc Vehicle > 1600 cc

Vehicle Maintenance INR 1,800 per month INR 2,400 per month

Driver Salary INR 900 per month INR 900 per month

Mode of Claim
Tax exemption is based on only the Original Bills (Photocopies are not allowed)
Expenses incurred for Fuel, Maintenance, Insurance Charges (Photocopies will be
allowed), Pails change, Vehicle Service Charges etc., are eligible for tax exemption.
The bills should be for the current financial year.
Employees claiming the full amount without producing bills will be taxed at applicable
rates
Employees availing the company transport facility can avail this FBP as well,
considering the fact that they might use their own vehicle to commute to the pick/drop
point.
Employees availing Vehicle Maintenance cannot avail the Conveyance Allowance
exemption.
Employees should attach a copy of the Registration Certificate. The vehicle must be
in the name of the employee.

7. Conveyance Allowance

Conveyance allowance is an allowance granted to an employee to meet his/her expenditure

for the purpose of commuting between the place of residence & place of employment. It is
exempted from Tax to the extent of INR1600/- per month.
However, such transport allowance granted to an employee who is blind/orthopedically
challenged with a disability of lower extremities is exempted to an extent of INR3200/- per
month.
Employees availing exemption on conveyance Allowance cannot avail the Vehicle
Maintenance exemption. Employees in Grade 26 and above, availing the company provided
transport and opted for Vehicle Maintenance cannot avail this exemption.
Mode of Claim: Bills submission is not required for availing this exemption.

8. Meal Vouchers

Sodexho meal vouchers are provided for all employees in grade 21 and above. Rule 3(7)(iii))
states that value of free food and non-alcoholic beverages or meal vouchers provided by the
employer is exempt from income tax to the extent of Rs. 50 per meal per day. The exemption
would be limited to Rs.2200 wherein the calculation would be as under.
Rs. 50 per meal per day. So for 2 meals it would be Rs 100 per day. Since we follow 5 day
week schedule, the total work day in a month would be 22 and multiply Rs 100 per day, would
result in Rs 2200 per month.
Tax Slab
The new tax slab for the FY 18 would be as under.
Income Range Tax %
0 250,000 Nil Tax
250,000 500,000 5%
500,000 1,000,000 20%
1,000,000 & Above 30%
Surcharge %
50 lakhs 1 crore 10%
1 crore & Above 15%

Tax rebate
The rebate for the low income earners (under section 87A) is INR 2500 and will be available
only in case of income up to INR 3.5 lakhs (earlier, INR 5 lakhs).
Section 80 C Exemptions

Proof to be submitted:

Original bills are required for

o School Fees (Only Tuition/Term Fees Would be considered).
o LIC.
Statement showing contribution for
o Mutual Funds
o SIP
o ELSS
o ULIP
Interest paid certificate for Housing Loan principal.
Self-attested Photo copy of passbook and contribution details for PPF/Sukanya
Samridhi.
For other investments self-attested photo copy is required.
Proofs to be submitted.

Copy of monthly contribution statement for NPS.

Premium paid certificate for Mediclaim, showing the insured details.

Proof to be submitted:

Copy of disability certificate from Government hospital signed by Chief medical

officer/Neurologist/Civil Surgeon in a Government Hospital for severe disability.
Proofs to be submitted:
Original Interest paid certificate from the bank, clearly showing the interest paid
portion.
Bank Statement is not accepted as a proof.
Proofs to be submitted
Original interest paid certificate from the Bank/Financial institution with the breakup of
principal and interest paid during the FY.
Bank statement is not accepted as proof.

Note: All investment should be for current FY 17- 18.