Staff Welfare expenses A/C and donation A/C

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This query is : Resolved

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This discussion addresses whether payments made to employees for personal events like weddings or funerals should be debited to a 'Donation Account' or 'Staff Welfare Expenses'. The consensus is that such expenses are correctly classified under Staff Welfare. However, the reasons for the payment must be reasonable for proper accounting and to avoid potential disallowance for tax purposes.

Yogesh Motwani

Yogesh Motwani (Querist)

09 December 2023 I was performing an audit in which i noticed that the company has given amounts to employees for sister marriage and for funeral of father or any other family member of the employee eg;-rs5000 for sister marriage of employee X . the company has debited the Donation A/C , should the expenses should be considered under staff welfare expenses?

RAJA P M

RAJA P M (Expert)

09 December 2023 Yes, Company can be account the expense under Staff welfare. But, the above said reason is not reasonable for accounting.

Yogesh Motwani

Yogesh Motwani (Querist)

09 December 2023 So the company should treat the amount given to their employees in staff welfare exp instead of donation a/c, the entries should be transferred?

RAJA P M

RAJA P M (Expert)

09 December 2023 Yes, It will be account as staff welfare expenses and reason should be reasonable. Otherwise if it's account as Donation then it will be disallowed.

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