With the help of a Flexible Benefit Plan (FBP), you can easily customize your salary package including things like travel allowance, meal discounts, and more. An Employer includes a Flexible Benefit Plan (FBP) as a part of an employee’s compensation, including salary components such as meal coupons, book allowance, and transportation allowance.
Employees can also customize these plans accordingly and have the freedom to create their salary structure inside the plan depending on the predicted expenses.
Also, employees can choose which FBP component will be included in their salary, as well as the amount of each. This strategy helps employees to prepare their taxes and help in reducing their tax liabilities.
Saving Tax on Salary Income
Various components can be included in your salary which will help you to save tax. The following is a list of some major components that can allow you to save significant taxes.
| Salary Components |
| House Rent Allowance (HRA) |
| Leave Travel Allowance (LTA) |
| Mobile, Internet Bill |
| Fuel Allowance |
| Children’s education & hostel allowance |
| Meal/Food |
| Academic Development 10(14)(i) |
| Books/Magazines/Journals |
| Driver Salary Allowance |
| Gift Voucher |
Also Read: Why is salary slip important for employees?
Components of Flexible Benefit Plan
While you file annual Income Tax Return (ITR), you will notice that a portion of your pay is tax-free. Declaring them while completing your taxes allows you to drastically lower your tax burden.
Some of the major components of a Flexible benefit plan that are exempt from taxation are as follows:
Travel Benefits
- Employers often cover daily travel expenses through Flexible Benefit Plans, offering fuel allowance and car provisions.
- Employees can save taxes by submitting fuel bills, but misuse may lead to taxation.
- Company and personal cars, along with chauffeur services, are common benefits for select employees.
Communication Allowance
- Organizations commonly include broadband and mobile bills in salary packages.
Meal Benefits
- The Income Tax Department views office meals and non-alcoholic drinks as benefits.
- Tax-free meal coupons are allowed up to Rs. 50 per meal, providing significant yearly savings.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing. Consult a CA for tax planning.
