Reimbursements and allowances are provided to salaried class so as to reduce their tax liability from the monthly gross salary. And fuel purchases or expenses they also provide an individual with tax benefit as fuel allowance, car allowance, fuel expense reimbursements, fuel benefits etc is allowed deduction.
There are some other reimbursements which lessen the tax liability for the concern including eave travel allowance, fuel allowance, mobile and internet allowance, gadget allowances, meal vouchers and gift vouchers, among others.
The benefit categorized as either fuel allowance, car allowance, petrol allowance or fuel allowance by corporate if availed by salaried for tax benefits can save them Rs. 12,000 per year on taxes. The allowance typically forms part of the Income-tax guidelines as a motor car allowance or perk.
Employees of the concern who drive company-owned or personal cars for office related work are extended such petrol or fuel allowance.
Few Points to know about fuel allowance:
1. It is extended as part of the salary structure to provide tax saving, in some of the cases, it may include driver's salary as well. And employers may consider offering this benefit without any increase in the overall CTC of the employee.
2. To claim the benefit, employees need to submit the receipt in lieu of petrol, diesel purchase for that matter and get reimbursements against them.
3. Employees are allowed full tax exemption to the extent of receipts deposited with the employers
4. On the total billed amount for fuel purchase, employees can save up to 30% in taxes.