TAX on Reimbursements( Urgent)

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This query is : Resolved

vijay (Querist)

22 January 2010 Our Company is based in hubli, We send employees to bangalore to our clients office where they work at their place , ours is service oriented chip designing company. We call the employees who work from our clients place in banaglore as ONSITE employees.We reimburse them monthly onsite reimbursements as follows:
Food- 3000 per month
Accomodation- 3000 per month
travel(local in bangalore) Rs 1500 Per month

This is paid irrespective they give bills . or actuals as per the bills but not exceding the above amount.

My question is .Whether the above reimbursements are taxable in the hands of employees. At present the same are added to their salary and taxed whcih i feel is wrong as they are not in nature of perks. Kindly clarify in details as per the IT act.

veena

veena (Expert)

22 January 2010 In case of travel exemption can be claimed u/s. 10(14) which is restricted to Rs.800 p.m. In case of accomodation employee can claim HRA exemption u/s. 10(13A). amount has to be worked out according to conditions in that section. Food allowance will be taxable according to me.

KRISHNA KUMAR R C

KRISHNA KUMAR R C (Expert)

22 January 2010 Reimbursement of expenses incurred for offical purposes will not come under the pur-view of the TDS provisions and it is exempt from tax.

KRISHNA KUMAR R C

KRISHNA KUMAR R C (Expert)

22 January 2010 Reimbursement of expenses incurred for offical purposes will not come under the pur-view of the TDS provisions and it is exempt from tax.