Work-from-home for J&K residents could mean more tax burden. Here is how

ZT Team Report

Srinagar: Residents of J&K who are working from home or have returned home from other state due to the Coronavirus pandemic may have to pay more income tax, as some tax exemption salary components may not remain tax free any more.

Tax experts told Ziraat Times that the current salary structure of employees includes various allowances, out of which, certain allowances like conveyance allowance, Leave Travel Allowance (LTA), House Rent Allowance (HRA), etc. are exempt basis actual incurrence of expenses.

LTA is granted to meet the expenses incurred for travelling while on leave.

Because of work from home and travel restrictions, there was no expenditure incurred on account of conveyance or leave travel and hence such allowances would now form part of taxable income. Further, due to COVID-19 situation, many J&K residents who are migrant employees of companies vacated their rental premises and moved back home.

“As there was no actual expenditure towards rent, the HRA also become taxable”, experts say.

Given the above uncertainties, many allowances forming part of salary structure, which were enjoying the tag of ‘Exempt’, will now (although for a short duration, till things return to normalcy) be a taxable part of their salary, thereby increasing the tax burden on the employees.

“Thus, it would be worthwhile for the employers to revisit the salary structures of their employees and include reimbursement of broadband internet subscriptions, food coupons, books, and periodicals, etc.”, Rajeshree Sabnavis is Founder, and Mansi Parekh is Assistant Manager at Rajeshree Sabnavis & Associates, a boutique tax consultancy wrote in Financial Express.

As taxpayers eagerly await more tax relief measures from the government, they need to be aware of the tax implications arising from the work from home regime while doing their tax planning, they further said.