Per diem taxation in hands of employees

In my opinion fixed per diem would imply fixed daily allowance. fixed per diem to the extent justifiable as spent for company's work  would not be taxed balance would form part of employees salary

i think this amt is resonable as per co's policy and is incurred from business prupose, so it will not be taxable in the hand of employee.

The amount is paid towards meeting laundry, Ironing, daily food expenses & other daily expenses.

My view is that if an employee stays for 10 days, the amount of per diem will be $500 ($50*10). He does not submit bills as it is not required from company's travel policy point of view.  Hence, per diem should be now (after FBT is abolished) taxed in the hands of employee as his income.

But now the question arises that the employees who were on site in month of August 2009 and came back to india in the same month, will their per diem be taxable and in month of January 2010? They will revolt as they were not informed, about tax deduction. They will be taking very less salary at home in month of January. Please submit your views.

Take a declaration from the concerned employees, stating that the per diem amount received by them has been expended completely by them towards meeting laundry, Ironing, daily food & other expenses  and that the same would be justified before the tax authorities, if required, in the event any enquiry is initiated in this respect