All about Lafha Tax

The Lafha tax is a type of fringe benefit which can be availed by those who are living away from home for work purposes. They are a way of compensation provided by employers to their employees for making them to live away from home for work related purposes. These are compensations provided for any additional expenses and any other disadvantages suffered by the employees during the period of the stay.

Many a people do not know the difference between lafha tax, travel allowance or relocation costs. These are three different aspects and as different as chalk and cheese. Where the travel allowance is provided to people who have to travel for short period of time for work purposes, the lafha is provided to those who have to live away from home for extended periods of time. Similarly the relocation costs are provided for those who relocate to a new location on permanent basis for work related reasons.

Small establishments may or may not provide enough compensation or lafha tax to their employees if they have to live at a new location for a certain period of time. It is thus advisable to have in writing the specifics of the arrangement from a higher authority of the establishment. It is also important to have a prior knowledge of the different types of reimbursements you are entitled to avail.

Depending on the company policy some of them may provide lafha tax to their employees directly via the payroll, while some of them may provide the same as accounts payable i.e. you receive compensation only after you have produced the necessary receipts for the expenses. In both the cases the employees require to make proper documentation of their expenses and the other allowances they are entitled to for the specific period.

It is generally observed that the lafha tax varies from person to person and also company to company. It is usually calculated only after considering the level of the employee in the organization, the period of the stay, the rough estimates of the expenses incurred or other additional expenses incurred, disadvantage suffered etc. All the above factors help in determining the amount an employee is entitled to receive from the employer.

The most commonly befitting employees that fall in the category of people who are eligible for availing lafha tax include those who work at construction sites and have to live near to it in huts, tents etc., marine people who live on ships for extended periods, oil industry employees who live offshore on oil rigs, employees on training etc. They have to live away from their homes for work purposes and may suffer disadvantages or additional expenses due to new environments.

These days it is easy to avail for the lafha tax compensations. They can be filled in on the internet or via a written application. The filing processes have been simplified to a great extent and provide a means for people to get their expected dues on time and in right amounts.