Income Tax Return (ITR) Filing: These reimbursements are popular choices of salaried employees

Generally, salaried employees do struggle in last minute income tax return (ITR) filing, by gathering their documents and submit them in time. ITR comes in various forms and different categories of taxpayers are required to communicate their income and income from other sources before Income Tax Department. By doing so, a taxpayer gets refund value from their overall taxes they have paid. Hence, ITR is generally used as a medium to get some portion of taxes as refund. Interesting, studies have revealed that, the most popular choice is claiming for phone and internet allowances; about 76% of employees prefer mobile and internet reimbursements. 

Smriti Somani, Marketing Head at Zeta said, “Communication benefits or in other words, mobile and internet allowance is provided by the employer as part of the tax-savings program that helps employees take home a higher salary without adding any additional cost-to-company (CTC). As a pre-tax deduction, communication reimbursement helps reduce employees overall income taxes and is undoubted, the simplest form of reimbursements.”

In the Income Tax guidelines, communication reimbursements cover internet/data connection and phone bills - both landline and mobile number and the tax allowance is provided for all official calls and data usage.

Here are some benefits of communication tax-benefits, as per Somani. 

1. BYOD policy: Communication reimbursement follows the Bring Your Own Device (BYOD) policy of allowing employees to use their own smartphones or other devices for work purposes. Under this policy, your employees can claim their phone bills and internet expense even when they are using your personal phone to make official phone calls. This way you don’t have to worry about incurring any additional costs of providing a device; as it’s often done in case of laptops or desktop.

2. One claim for all: Out of the 51 allowances mentioned in the Income Tax guidelines, some tax-saving benefits may require certain criteria. However, mobile/phone and internet allowance are universal to all employees.

3. The number game: On average, most companies offer anywhere between Rs 1,000 to Rs 3,000 per month for mobile and internet claims. As per the Income Tax guidelines, there is no cap or limit to which an employee can make the claim. Having said that, you still have the advantage to decide the annual reimbursement limit.

4. Keep a record: You need to keep records of the bills to offer tax deductions, and these could be digital proofs such as e-bills or even physical copies. Companies must ask employees to regularly send digital copies of the bills to avoid going through heaps of paper during the tax filing season.

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To further help you understand how you can boost your employee’s take-home salary, here ’s a rounded up number basis the assumption that you’re likely to offer a reimbursement cap of Rs 2,500 per month for mobile phone and internet reimbursements. Further, this assumption is for employees whose salaries fall under the 30% tax slab:

Apart from above, these are few guidelines a company must follow in regards to communication tax benefits and to convey them to employees. 

According to Somani, here are some of the guidelines companies must make employees aware of.

1. Name to claim: To make the claim, employees must have a data or phone connection in their name and they can claim for both landline and a prepaid connection.

2. Number of connections: Though the Income Tax guideline doesn’t follow any rules with regards to the number of connections, most organizations consider just one connection/number for reimbursements.

Thereby, while filing ITR, you must note that even your mobile data packs, and communication can help you safe hefty on taxes. Make sure you are aware of the above mentioned guidelines, and if you have any queries then do ask your company. They should be able to help you!