Regarding client side daily allowance

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2018 Dear Sir/Mam,

As per our company police. if any employee visit our Client side out of Mahaashtra. our company Provide employee extra Daily Allowance Rs.1000/- Par day for employee exp (Lunch,Dinner & Other Exp). against this exp they are not submitted any bills.

My question Is.

Can consider Client Side DA as employee Extra Income.

or

Can I treat employee client side exp.

Expert : Anonymous

Expert : Anonymous (Expert)

05 April 2018 It's On Duty Expenditure amount then it will treated Expenditure head in company's books..

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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20 July 2025 Great question! Here’s how you can treat Client-Side Daily Allowance (DA) paid to employees, especially when no bills are submitted:

1. Is Client-Side DA taxable as Employee’s Income?
Yes, generally it is taxable as a part of the employee’s salary income unless it qualifies as a reimbursement or perquisite exempt under Income Tax Rules.
If the allowance is paid without submission of bills or proof of expenses, the Income Tax Department may treat it as part of salary and tax it accordingly.
2. When is DA non-taxable?
If the allowance is paid as a reimbursement of actual expenses incurred with supporting bills, then it is not taxable.
Some allowances like travel allowance, daily allowance for official tours are exempt up to prescribed limits if substantiated with proofs.
3. In your case:
Your company pays Rs. 1000/- per day as DA for client site visits outside Maharashtra without requiring bills.
Since there is no proof of expenses, this is likely to be treated as taxable salary income for employees.
For the company, this is an employee expense, but for the employee, it will be taxable.
4. How to treat in company books?
Treat the DA amount as part of employee’s salary / payroll expense.
Deduct TDS on salary on this amount.
Do not treat it as a business expense with supporting bills (since no bills are submitted).
5. What if company wants to treat it as business expense?
The company can reimburse actual expenses if bills are collected and maintained.
Without bills, expenses are not allowable as business expenses for tax purposes.

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