Tax on reimbursements unclaimed
This query is : Resolved
14 February 2008
Sir/Madam
Please resolve:
An employee opts for higher reimbursements in his CTC. The Company accordingly calculates and pays Advance FBT o the same. However at the end of the year the employee fails to produce enough bills/supportings to claim the reimbursements. Would the company be required to pay Income Tax on the excess reimbursements ? Or the payment of FBT would suffice? How would it have the effect from Income Tax point of view?
Please resolve:
An employee opts for higher reimbursements in his CTC. The Company accordingly calculates and pays Advance FBT o the same. However at the end of the year the employee fails to produce enough bills/supportings to claim the reimbursements. Would the company be required to pay Income Tax on the excess reimbursements ? Or the payment of FBT would suffice? How would it have the effect from Income Tax point of view?
S.Srinivasaraghavan
(Expert)
14 February 2008
FBT is not a means of avoiding incometax on the income which fall within the scope of salary income.
17 February 2008
Even though bills are not produced, if company is having sufficient evidence (purpose)that it is for business. It's allowed under Sec.37(1) and there is no violation. When exp is allowed in Income computation of co., It is certainly liable to FBT.
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