Salary structure

[Asked by Guest]

Taxability of salary (CTC):

What is the exemption one can claim from salary as regards reimbursement in the following cases:

Case:  CTC Rs. 100 (including basic+HRA+medicals+LTA = Rs.60, Bal Rs. 40 mentioned in CTC as reimbursement (Car/petrol reimb, attire, books and others)

Can the balance of Rs. 40 be claimed as non-taxable through the below mode:

If so, does it need to be included in Form 16.

Modes are all for official purposes:

1) petrol/maint of car used for official purpose. In some cases for distant travel, car hire charges paid to travel agency (per bills)

2) Books and periodicals purchased

3) Courses attended for enhancement of knowledge

4)  Attire bills for suits purchased for attending official functions/meetings

 5) Hotel food bills for entertaining clients etc.

[Sunil K. Jain]

All expenses mentioned by you from S.No. 1 to 5 are on account of reimbursment of actual expenses incurred for business purposes, as such they are not part of the CTC and has no place to form part of form 16. However If they are paid to employee as allownace then it will be part of perquisites and calculated as per rule 3(1) of the income tax rules 1962

AI Summary

Reimbursement of business expenses not taxable when genuine; allowances for such items are taxable as perquisites under valuation rules.
Reimbursement of actual business expenses for petrol/car maintenance, travel charges, books, courses, attire for official use, and client entertainment are not part of CTC and need not be included in Form 16 when paid as reimbursements; payments made as allowances instead are taxable as perquisites and subject to perquisite valuation rules.