29 December 2012
i have an query related to salary part. i had asked some what related qus. earlier also but that time the intention was something else. so right now the situation is like , an employer earlier reimbursing the petrol and driver's expenses of his employees. both the petrol and driver is provided to the employees only for official purpose. but now from this F.Y. the employer had decided to give a fix amount which is amounting to Rs. 20,000 to his employees adding in there monthly salary and not to reimburse any of there petrol and driver expense. so if we'll see from the employee's point of view into this matter, we'll find that as Rs. 20,000 is an addition to there salary this will increase the tax burden on them because earlier they were getting the reimbursement which was non taxable. so is there any other way out to give the fix amount of money to the employee without putting any tax burden on them? for example: in F.Y.11-12 "A" was getting salary of 10L and 2.4L as reimbursement of expenses. so he was giving tax on 10L only. but in F.Y 12-13 he is getting 12.4L as salary and now he has to pay tax on whole 12.4L. so this is increasing the tax burden on "A".
29 December 2012
Thanks sir for your reply. but its simply unfair with the employee. he is making expenses for company only and then also he has to pay tax on that. and if we'll see the net effect will find that the employee is making expenses of near about Rs 20,000. he is getting this 20,000 from his employer. but the net what he left with him is just approx 16000 because near about 4000 he has to pay as a tax.
29 December 2012
but then this will increase the companies expense. as in if will go in reverse calculation then the company has to pay an approx 24000. here the company is in loss of 4000.
29 December 2012
But company is not realising this.. that is the reason company changed its reimbursement policy. Where ignorance is BLISS... it is folly to be wise. Change will come with its own cost. (Favourable or unfavourable)
CAclubindia
