When it comes to managing personal finances, salaried employees often look for every possible way to reduce their income tax burden legally. One of the lesser-known yet significant provisions under the Income Tax Act is Section 10 10cc. While it might sound like just another section in a complex tax law book, it holds practical importance, especially for employees receiving perks in kind.
In this blog, we’ll unpack what 10 10cc of Income Tax Act is all about, why it matters for salaried individuals, and how digital tools, accounting software and invoicing software (such as MargBooks) can help in efficient tax planning and compliance.
What is Section 10 10cc of Income Tax Act?
Section 10(10CC) of the Income Tax Act deals with tax paid by the employer on non-monetary perquisites provided to the employee.
In simpler terms, let’s say your employer gives you a benefit that is not in the form of cash, like a company car, accommodation, or membership to a club. These are termed non-monetary perquisites. Now, if your employer decides to pay the tax on these perks on your behalf, Section 10(10CC) allows this tax payment to be exempt from your total income.
This means you won’t be taxed again for the tax paid by the employer on your behalf for these specific benefits.
How Does It Work? An Example for Better Understanding
Imagine this scenario:
- You receive non-monetary perks worth ₹2,00,000 from your employer.
- Your employer decides to pay the income tax liability on this amount on your behalf.
- The tax paid by your employer amounts to ₹60,000.
As per Section 10 10cc, this ₹60,000 will not be added to your taxable income. So, while you’re enjoying the perks, the tax part is handled behind the scenes, and you’re not double-taxed.
This is a smart provision, especially for those in higher income brackets, where perquisites can form a significant part of the salary package.
Why is Section 10 10cc So Important for Salaried Employees?
1. Reduces Tax Burden
The main benefit is clear, it reduces your overall tax liability. If your employer is already paying tax on your behalf for non-monetary perks, you don’t need to worry about it being added to your taxable income.
2. Makes Salary Packages More Attractive
Companies often structure salary packages with a mix of monetary and non-monetary benefits. With this section, employers can offer attractive perks without increasing their tax stress. It’s a win-win.
3. Promotes Transparency
Thanks to growing digitalisation, employers are now using robust accounting software to manage salaries, deductions, and benefits. By automating tax calculations, including provisions, Section 10(10CC), they ensure transparency and reduce errors.
4. Helps in Strategic Tax Planning
If you’re someone who wants to make the most of every available tax exemption, then understanding and applying 10 10cc of Income Tax Act can help you and your employer plan your CTC more effectively.
Role of Digital Platform Like MargBooks
Gone are the days when tax computation and salary structuring were done manually on Excel sheets. Today, advanced tools such as MargBooks have simplified everything, from payroll processing to tax computation.
How MargBooks Helps:
- Automatic Computation: Easily incorporates provisions like Section 10(10CC) while calculating tax.
- Real-Time Salary Breakdown: Let’s you see how perks and benefits affect your taxable income.
- Accurate Invoicing & Reporting: As an invoicing software, it generates clean salary slips and tax reports.
- Compliant with Indian Tax Laws: MargBooks is constantly updated with the latest legal and tax changes, so you stay compliant effortlessly.
Whether you’re a salaried employee or an HR professional, using smart accounting software, MargBooks can ease your workload and give peace of mind when it comes to salary and tax matters.
Things to Keep in Mind
Here are a few points that employees should note about Section 10 10cc:
- It only applies to non-monetary perquisites. Monetary benefits, including bonuses or cash gifts, are not covered.
- The tax must be paid by the employer. If you pay the tax yourself, this section won’t apply.
- The benefit is only for salaried individuals, not freelancers or consultants.
Final Thoughts
Understanding your salary components is just as important as negotiating the CTC itself. Provisions, including Section 10 10cc of Income Tax Act, are designed to benefit employees, but they often go unnoticed due to a lack of awareness.
If you’re lucky enough to have a company that provides non-monetary perks and is willing to pay tax on them, this section ensures you aren’t penalised with an extra tax burden. And with the help of digital tools, MargBooks, managing these benefits becomes even easier.
In the long run, leveraging such exemptions, backed by reliable invoicing software and accounting software, can make a real difference in your take-home salary and tax planning.
