Income tax exemptions for employees under flexi benefit plan

Dear Experts,

Can any one clarify me about below  query, as answer is very precious and awaiting for the same. If some can enlighten me for the below, I am sure that answer would be very very ueseful.....for a life time. As you know working in a payroll without any FBP followed by Standard Statutory Deductions would be very easy provided if we have a pre desigend Templte. Thing is every one who wanted to be more proficent and to gain adequate knowldge towards FBP will arrise the below questions. Hence, Kindly request you all please let me know what is the accounting and Tax Treatment while disbursing the FBP.

Dear Seniors and Experts,

Can anyone clarify me how to disburse the Flexi Benefit Plans (FBP) to an employee?

 

As you all know it became a trend in today’s IT sector   in order to save income tax to an extent for employees and most of the companies offering the same. Such as Food Coupons, Gift Vouchers, LTA, Medical, Telephone, Fuel Reimbursements and Driver Salary which are included in CTC.

 

Here, I am aware that while giving an exemption for LTA we can consider the same as per Income Tax norms U/S 10 based on the eligibly for two entitlements in a Block of Four years. As far as Telephone/Fuel/Driver reimbursement is concerned, in which section can be considered all these for computing the taxable income? After my thorough research I could not find any exemption that we can give as per IT (if I am wrong please correct me) except Medical Reimbursement. We all know that reimbursement of Medical expenses up to Rs.15000/- is exempted under Section 17(2).  Food Coupons can give an exemption subject to Rs. 50 /- per meal in two meals a day and Rs. 5000 /- for Gift Vouchers under Section 17(2).

 

As these Flexi Benefits objective is to save income tax of employees, most of them provide their personal bills and ask for reimbursement as the same part of salary in CTC. If we pay the same against bills do we need to book the expenditure from Company books of accounts?

 

As these expenses are not belongs company is it correct?

 

Further, Telephone & Fuel Bills can be paid under Telephone Expenses A/c & Conveyance Expenses A/c in company books of accounts. In the same context if we reimburse the Driver salary in which account need to be booked. Here, if we book the same under salary A/c, as driver will not comes under payroll, it would be difficult to deduct P.F, ESI, PT etc. Moreover, if we have not done the same there would be always a chance to raise a question from P.F, PT, and ESI authorities at the time of Audits and inspections.

 

In view of the above, I request you all kindly let me know in which mode we need to make the payments for giving tax benefit as per Income Tax Norms for FBP.

 

How most of the companies are acting while makes the payments to their employees in the same context.

 

Your kind reply in this regard would be greatly appreciated.

 

Thanks & Regards,

Kumar