Salary perquisites
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 September 2013
Furnishing expenses reimbursed to employees, tax impact on employees & employer
CMA Ramesh Krishnan
(Expert)
08 September 2013
please explain in detail, what is furnishing expenses
22 July 2025
Sure! Here’s a quick breakdown on **furnishing expenses reimbursed to employees** and their tax implications:
---
### 1. **What is Furnishing Expenses Reimbursement?**
* When an employer reimburses an employee for expenses incurred on **furnishing** (like furniture, fixtures for official/home use), it is considered a **perquisite** or **reimbursement** under salary income.
---
### 2. **Tax Treatment for Employee:**
* If the reimbursement is for **official use** (like furnishing an office or work station), and supported by bills, **it is not taxable** in employee’s hands.
* If the reimbursement is for **personal use** (e.g., home furnishing), **it will be treated as a perquisite and taxable as part of salary income.**
* Employer should include the reimbursed amount in Form 16 under salary income if taxable.
---
### 3. **Tax Treatment for Employer:**
* The reimbursement amount paid by employer is **allowable as business expenditure** if it is a genuine expense related to business and properly documented.
* If the reimbursement is taxable in employee’s hands, employer must deduct TDS accordingly under salary.
---
### 4. **Documentation & Conditions:**
* Employer should ask employee to submit **original bills and proof** of expenditure.
* Maintain proper records to avoid tax scrutiny.
* If taxable, the amount should be reflected in **Form 16** and **TDS returns**.
---
### Summary Table:
| Scenario | Taxability in Employee Hands | Tax Treatment for Employer |
| -------------------------------------------------- | ---------------------------- | --------------------------- |
| Furnishing reimbursement for official/business use | **Not taxable** | Allowed as business expense |
| Furnishing reimbursement for personal use | **Taxable as perquisite** | Allowed as business expense |
---
If you want, I can help prepare a formal note or advise on specific cases. Would you like that?
---
### 1. **What is Furnishing Expenses Reimbursement?**
* When an employer reimburses an employee for expenses incurred on **furnishing** (like furniture, fixtures for official/home use), it is considered a **perquisite** or **reimbursement** under salary income.
---
### 2. **Tax Treatment for Employee:**
* If the reimbursement is for **official use** (like furnishing an office or work station), and supported by bills, **it is not taxable** in employee’s hands.
* If the reimbursement is for **personal use** (e.g., home furnishing), **it will be treated as a perquisite and taxable as part of salary income.**
* Employer should include the reimbursed amount in Form 16 under salary income if taxable.
---
### 3. **Tax Treatment for Employer:**
* The reimbursement amount paid by employer is **allowable as business expenditure** if it is a genuine expense related to business and properly documented.
* If the reimbursement is taxable in employee’s hands, employer must deduct TDS accordingly under salary.
---
### 4. **Documentation & Conditions:**
* Employer should ask employee to submit **original bills and proof** of expenditure.
* Maintain proper records to avoid tax scrutiny.
* If taxable, the amount should be reflected in **Form 16** and **TDS returns**.
---
### Summary Table:
| Scenario | Taxability in Employee Hands | Tax Treatment for Employer |
| -------------------------------------------------- | ---------------------------- | --------------------------- |
| Furnishing reimbursement for official/business use | **Not taxable** | Allowed as business expense |
| Furnishing reimbursement for personal use | **Taxable as perquisite** | Allowed as business expense |
---
If you want, I can help prepare a formal note or advise on specific cases. Would you like that?
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