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Reimbursement of Conveyance Exps.
I have come across a case where the company is reimbursing conveyance expenses on the basis of the conveyance claim bills produced by the senior staff on month to month basis. The bill is on the stationery of the company's format showing the place visited, no. of kms, Rate per km & total amount, without any supporting bills/ documents. This is I suppose just to take the benefit of deduction of such conveyance expenses from the company's perspective, similarly, it would be beneficial to the concerned staff, as the same would not form the part of their taxable income. Please guide whether this is the correct way of tax planning. If not, what other alternative(s) can be suggested in this regard. Please advise at the earliest.
Replies (7)
Whether the way is correct or not is contained in your query.
However, the expense will attract FBT.
well for reimburdement of conveyance expenses supporting bills are necessary. for rail/air/bus tickets it is possible to show supports, but this cant be done so in the case of auto and taxi fares. But make it sure that the entry is authoorised by a competitive person of authority. so if authorisation is not done you can suggest them to get it authorised, but as also doubt the office we cant help it. we will be able to provide proper service only based on the information given by them to us.
Ex: a person who suffers from head ache tells a doctor that he suffers from stimach pain, the doctor cant do anything!
My main concern is not whether it is within the ambit of FBT. According to me, this amounts to tax evasion and not tax planning.
With the abolition of Standard Deduction, the FM has shown his step motherly attitude towards salaried class. While professionals can claim expenditures in relation to business or profession, the salaried class has no option, but to pay tax on gross salary.
I think, tax evasion is the only tool for tax planning for employees.
The Company should be prepared to justify the reasonableness and appropriateness of the QUANTUM of expenditure, if and when, required by the IT Department.
So long as it is infrequent and within reasonable limits (with reference to distance and mode of travel), the Department may not question.
However, the stance of raising query suggests that the amount being claimed has gone out of reasonable limis. The Company may be advised suitably
I too agree with Mr.Shyam Lal Naik of the FinMin`s attitude and its effects. but certainly since we r auditors we can search 4 the authorisation part from the client
See there is no written rule to say that the exps claimed via this route is a tax planning tool. Income tax rule 2BB gives assessee the benefit to avail exps expenditure expended in form of conveyance exps. This however can be supported through maintenance of log books at offices. Now the main questions come in is whether we require documentary evidence to support the travel, to this what is to seen is any exps for conveyance which is reasonably exceeding limits/usage or is an amt in poroprtion to % of salary unreasonable should always be supported with biils. FBT scope - the charging section says that anything which is specificaly exempt under salaries head would not be charged under FBT. Howver, in order to avoid unnecessary arbritration FBT should be calculated and paid.
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