Amarpal S Chadha
As the calendar turns its final pages, many of us focus on wrapping up deliverables, planning for the next year or quarter, and preparing for a well-deserved break. One area that merits equal attention is the benefits package of an employee. These benefits often operate on a “use it or lose it” basis expiring at the end of the financial or calendar year if left unutilised.
Before the year closes, it’s worth reviewing your HR or payroll portal to understand what benefits remain available under your package.
Leave travel allowance
If your salary structure includes a Leave Travel Allowance (LTA) component, this could be an excellent time to make use of it especially under the old tax regime, where such allowances continue to enjoy tax exemptions. Given that the LTA block is ending this December 31, 2025, it may be a wise choice to claim that LTA lying untouched in your benefits package.
Turning leave into value
If you’ve been holding on to your paid leaves like a hidden reserve, now is the perfect time to take stock. Where company policy permits annual leave encashment, employees may consider encashing a portion of their accumulated leave. However, leave encashment during service is fully taxable under Income from Salary. If your taxable income happens to be lower this year perhaps due to higher deductions or investments, encashing a portion now could help minimise your overall tax impact.
For employees approaching retirement or exiting the organisation, it is advisable to claim leave encashment at the time of separation, as Section 10(10AA) provides a tax exemption on such payments.
The smart connection
In the rush to wrap up the year, it’s easy to overlook the smaller components of your compensation like telephone, internet, or mobile reimbursements. Yet, these seemingly modest perks can quietly add up to meaningful savings. Many organisations offer such allowances to cover official communication expenses, and when supported with valid bills, they remain fully tax-exempt.
Health check-up benefit
Many organisations extend annual preventive health check-ups as part of their employee wellness programmes, yet many employees allow these valuable benefits to lapse unused by year-end. Employers often integrate such check-ups within corporate health insurance plans or reimburse employees for diagnostic expenses to promote early detection and overall well-being.
If the employer provides or reimburses the cost of preventive health check-ups to the employee as a measure to ensure the employee’s health for business continuity, and such reimbursement is not a fixed allowance but is strictly restricted to actual expenditure incurred and supported by bills, such reimbursement is not a taxable perquisite in the hands of the employee.
The writer is tax partner, EY India. Shanmuga Prasad, tax director, EY India also contributed to the article.
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