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sandeep sahu (Querist)

20 November 2010 Dear Sir
My doubt regading the salary structure of a company. The company pays basic pay , DA , HRA and Pf etc and debit to salary and wages account. But in addition to that it also pays aum of Rs. 25,000/- p.m as reimbursement of conveyances and reimbursement of house rent to some of its employees and debited to other expenses head like reimbursement of house rent and travelling and conveyance head.
Is this treatment is correct ?
and what are the consequences for violation of law .?
Please Guide me.
Regards

j p daga

j p daga (Expert)

22 November 2010 To reimburse the expense all of first employee has to produce the supporting documents otherwise in income tax this will be disallowed.

further if it is just monthly payment as kind of salary than person deducting the TDS has to consider it as "perks and allowance" and add it to his taxable income to consider the TDS liability oterwise the short deduction of TDS + penealty for concealmeant is also possible while under TDS assessment.

sandeep sahu

sandeep sahu (Querist)

23 November 2010 Dear Mr. Daga Jee
My doubt regarding this if house rent is being reimbursement to the employess then the HRS deduction so far as "excess rent paid over 50/40 % of salary : the rent paid should be less by the reimburse amount or the reimbursement should be treated as Perks .

Please waiting for early response.

j p daga

j p daga (Expert)

23 November 2010 Dear Mr Sahu,

I m not understanding what HRS deduction.

If it is typing error and you want to know about HRA deduction than it is allowed least of the following :-

i) Rent paid - 10% of slary ( slary mean basic salary +DA )

ii) 40% / 50% of Gross salary.

iii) Actual HRA received.

So amount calculated as per above formula will be exempt and anny thing over and above will be taxable perq for the empooyee.

Regards
J P Daga

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