There is a high chance that you have been saving more than usual for the last few months. It makes a lot of sense. Employees have been able to save more while Working from Home as there is no travel or eating out involved. However, this can hit your pocket as the income tax liability can eventually go up.
For those unaware, the salary paid by your company comprises of different parts. These include conveyance allowance, house rent allowance and Leave Travel Allowance (LTA) – all of which have a high chance of becoming taxable, if you have been staying home and not travelling at all.
As employees are not commuting to their office on a daily basis, conveyance allowance can no-longer be tax-free. When conveyance allowance is offered as a reimbursement it becomes tax-free only if you actually incur the expense and produce proofs for the same. So, in the absence of any official commute, conveyance allowance may become taxable.
Since most modes of transport remain non-operational, you are unlikely to have travelled in the last five months, which means you won’t be able to claim LTA for the current financial year. So, LTA may also become taxable. Worth mentioning here is that LTA can be claimed twice in a block of four years.
Lastly, if you were living in a rented place and decided to move back to your home town and work from there, you won’t be able to save on HRA. The inability to furnish rent slips makes you liable to pay more tax.
Many companies also are giving their employees a fixed amount as work-from-home allowance to meet expenses like internet bill, electricity charges, cost of buying laptop and office furniture for creating an office set up at home and does not require you to produce bills for the same. In such a case, the amount will be taxable in the hands of employees.
