What are the major components of LAFHA?

If you are amongst those employees who stay at the distant place from their residence in order to do their work duties, then you might be aware about the importance of LAFHA. This type of allowance includes various important components and some of them are mentioned below.

LAFHA mainly means living away from home allowance. This type of allowance is the one which is given to all kinds of employees who are residing at distant from their houses. Hence, it can be said that LAFHA is the important type of allowance which helps the employees to save all their food and accommodation expenditures. After all, these both are the most components in which the major expenditure is being incurred by the people. Hence, with the help of this kind of facility; even the employees do not feel that they are wasting lot of their money only because they have to stay away from their houses due to work purposes. As a result, it can be said that LAFHA has served to be a very useful kind of allowance for all the people who are engaged in their employment purposes. Best part about this type of allowance is that it is not at all taxable as a result the employee is benefited to double. There is a certain pay scheme under which this allowance is being completely covered.

These types of expenses which are covered in such allowances are subjected to all kinds of fringe benefits. Under certain specific schemes, this kind of benefit is being taxed under the FBT on the overall amount which is taxable in nature. There are certain main components of this type of living away from home allowances. Important part about LAFHA is that there are certain important tax provisions which can allow you to deduct all kinds of amounts which are related to the accommodation as well as food component. Such components are also described as either the exempt food or even the exempt accommodation component. Besides, there are even many other extra cost related to food which are covered under the exempted components. There are also certain additional exact guidelines which are to be fulfilled only then this type of allowances would be provided to the employees.

Another important aspect about LAFHA is that the amounts obtained under this would be considered as defensible as well as reasonable. Comparison between several expenses related to food and accommodation is made and the calculation of difference between the average expenditure is being made. Overall cost of the food at various alternate locations is made and also the composition or the overall number of family members of the employee's at starting of the FBT year is calculated. Apart from this, even the total number of members as well as their ages also needs to be mentioned. Even the usual cost of food at the home location is also made. Also, the LAFHA declaration is made before it is being given to the employees. The entire above mentioned are the most important components related to the LAFHA.