The Flexible Benefits Plan (FBP) is the customized salary structure of an employee. Employees can choose and customize their FBP items as per their requirements. There are predefined checks and balances available for all the FBP items. In this way, employees can achieve the maximum tax benefit. Creating FBP is an optional activity based on a company's policies.
Let us consider an example:
One of the commonly provided benefits in salary structure is HRA. HRA component is beneficial in saving tax for those employees who stay in rented accommodation. For people who stay in their own houses, HRA becomes taxable. In such cases, under FBP, employees can choose other components such as Leave Travel Allowance (LTA) instead of HRA. This will help employees with owned houses to achieve maximum tax benefit.
To navigate to the FBP Declaration page, click Salary > FBP Declaration.
On the FBP Declaration page, if the admin has not created a plan for you or you are declaring FBP for the first time or if the declaration window is not open yet, you can view an empty screen with the relevant message.
If the admin has created your FBP plan but the plan is not released yet, you can view a screen that displays all the FBP items.
When FBP is created for you but not released yet, you can view the following information on the FBP Declaration page:
Month for which plan is applicable.
FBP status as locked or released.
Total considered in payroll in rupees.
Total declared amount in rupees.
Total allocation of the amount in rupees.
Special allowance of your FBP in rupees.
List of FBP components.
Maximum limit available for each FBP component.
Amount considered in payroll for each section.
The declared amount for each FBP component. This amount may be prefilled by the admin.
After the admin has created and released an FBP, you can declare your investment plan to achieve maximum benefit. You can choose from various items offered by your organization based on organization policies predefined by the admin.
To declare FBP, perform the following actions:
Navigate to Salary > FBP Declaration.
Click Edit on FBP Declaration page. Edit Form page appears.
You can view the Max Allotment amount in rupees. Max Allotment is the maximum amount for which employees can declare FBP.
Select the check box against the components you want to declare in FBP.
Specify the amount under Preferences column. Every time you add an amount for a component, you can view the updated Total declared amount in the footer. You can also view Special Allowance Balance in the footer. See the section below for various types of FBP items.
Click Submit to declare your FBP.
Note: Click Clear to reset and re-fill the FBP form. You can edit the form even after submission till the admin locks the payroll for the selected month.
In FBP, some of the item's amount is already fixed by your admin. Also, some of the items such as FBP Basic are selected by default as part of your salary structure. To select some FBP components, you must select the main group. The item list contains the following types of components:
Mutually exclusive components: Components in the Items list can be mutually exclusive with another component. This means that you can choose any one component out of the mutually exclusive components. For example, you can choose either Car Above 1600CC or Car Below 1600CC. You can not declare both. Mutually exclusive components are grouped together.
Mutually dependent components: Dependent components are components which are dependent on specific and relevant items. For example, Driver Allowance is relevant only for employees who own a car. Thus to declare Driver Allowance, you must also declare the type of car ( Car Above/ Below 1600 CC ) you own. The dependent components are grouped together with relevant mutually exclusive components in the Items list.
Quantity based component: A component can be quantity based. For example, medical. Medical can be declared in multiples of 1000. So, under the Preference column, if you specify the number as 5, the declared amount is 5 * Rs 1000 = Rs. 5,000.
Opt-in components: These are the components that you can either select or not select. The amount is already fixed by the admin for these components.