reimbursement

Tax planning 832 views 3 replies

Divya Karthik

459 Points Joined February 2009

A company reimburses medical expenses incurred by the employee to the extent RS.5000/-. But in Income tax reimbursement upto Rs.15000/- in exempted. CAn th company raise its limits from Rs.5000 to Rs.15000?

When the company reimburses such expenses, what will be the advantge for the company.? I mean to ask company's expenses increases right? What treat will be from the company's point of view?

Urgent!!!!

Replies (3)

CA Shiv

Business Controller

2987 Points Joined February 2010

it will be better to increase to 15000 now. as there is no FBT.

Earlier LImit means:

upto 15000: exempt for employees and employer pays FBT.

above 15000: empoyees pay tax.

so its better to increase to 15000 as no tax liability for anyone...

Guest

dear friend

there is no liability in the hands of company as well as employee if the reimbursement exp. does not exceed rs.15000.so you company can increase the amount without any doubt.

Divya Karthik

459 Points Joined February 2009

Thank u....

So, if the company reimburses Rs.12000 for an employee & Rs.10,000 for another, What will be the treatment of such expenses in the company's books? I mean what entry will be passed..

Kindly response