What is a flexible benefit plan

in a salary breakup?
Good Question, Thank you for A2A.
Sachet Desai has given a good answer and it more or less covers the
concept of Flexible Benefit Plan. I think I can share some more insight
on the same.
As quoted by Sachet Desai, Flexible Benefit plan (FBP) is that
portion of salary that can be received as against different expenses,
to primarily save on income tax. Employees have the freedom to
design (play around) their salary structure within the FBP amount,
based on anticipated expenses.
Now, Letss take the below example:

The FBP in the above example includes:

HRA
Conveyance
LTA
Medical

Other allowances that can be part of FBP (but not limited to):
Periodic Journals Reimbursement
Telephone Reimbursement

What does it mean to you?

First, It simply means, you can reduce your taxable salary by
providing proof of expense for the mentioned FBP heads.
By doing so, you get a chance to save more tax and my suggestion is
to always declare everything under FBP even if you do not intend to
spend your money on FBP heads.
Second, another benefit is, Employees have the freedom to design
(play around) their salary structure within the FBP amount.
Say, you live with your parents and do not spend on House Rent, in
that case you are allowed to move the HRA allowance under LTA head
and then claim LTA for that amount to save tax.

When does this amount get paid? Is it paid in full?

First, Lets say you declare to spend the FBP heads and provide
receipts of the same to you company. Some company trust their
employee and pays the FBP amount upfront and ask for receipts at
financial year end. On not submitting the receipt tax is deducted.
On the other hand, some companies deduct the FBP amount (except
HRA) from your in hand salary monthly and reimburse the same to
you after you submit the receipts at financial year end. On not
submitting the receipt tax is deducted from the FBP, and remaining is
credit to you.
Second, In any case the company will pay you that amount in full
post tax deduction. FBP is a fixed head and not a variable head.
Hope it helps.
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Luthra
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Raghav Garg, Entrepreneur at heart, HR by profession!!

Updated Aug 28
Originally Answered: What is the flexi basket salary component
in India? Is it proof-based (claiming amount after providing
proofs)?
Flexi basket salary salary can be either a benefit or allowance.
If its an allowance like petrol allowance, mobile allowance etc. then
you need not show any proofs for it and the same will be paid out
along with your basic salary. These allowances might not be tax.
On the other hand, if its a benefit like mobile benefit or petrol benefit,
then you indeed need to show proofs of expenditure before you can
avail the benefits. these are generally tax free, if appropriate proofs
have been showed.
Please ask your HR to clarify what type of component is this.
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Aditi Sharma, Recruitment, Technology Recruitment, Blogging,

HR related queries
Written Jun 8
Flexible benefit plans may include health insurance, retirement
benefits such as 401(k) plans, and reimbursement accounts that

employees can use to pay for out-of-pocket health or dependent care

expenses.
4k Views Answer requested by Accounts Gandhidham
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Vidhya Raghunath, A super mom :)

Written Jul 11
Flexi Benefit Plan - FBP is something which allows you to compute
your own salary other than Basic.
Usually companies now gives you a basic salary and remaining as FBP,
where you can maximize your take home. Generally you can take HRA,
Conveyance Allowance, Medical, LTA and Special Allowance.
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Charu Sharma, Talent Management Professional

Written Aug 31

A flexible benefit plan or fbp is a component of your salary. It is

generally used to save tax. It includes sodexo or Accor food coupons,
LTA, special reimbursements etc. A person must use them to save tax.
Always consult your payroll person for making best of it.
1k Views Answer requested by Vaidyanathan Palaniappan
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Sachet Desai, Managing the most important capital of an

organisation.
Written Dec 14, 2014
Flexible Benefit plan (FBP) is that portion of salary that
can be received as against different expenses, to primarily
save on income tax. Employees have the freedom to design (play
around) their salary structure within the FBP amount, based
on anticipated expenses mentioned below.
Medical reimbursement : A portion of the FBP can be blocked to be
received as the taxable benefit for medical expenses during the financial
year.
Leave travel allowance: Again, the same FBP portion can be used to
claim tax benefits on travel expenses for your vacation.
Phone reimbursement : To save tax by paying phone bills.

If an employee does not wish to claim/incur such expenses,

he/she can receive the salary as FBP, which then becomes purely
taxable.

Different companies have different names for this component,

however the concept remains the same.

Hope this helps. ..

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