Tax on reimbursements unclaimed

This query is : Resolved

Richa (Querist)
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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?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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14 February 2008 FBT is not a means of avoiding incometax on the income which fall within the scope of salary income.

CA Mani

CA Mani (Expert)
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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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