If you are giving the bill for telephone to employer then it is reiumbersment of expense and the same will not be taxable for you but if the same is given in salary and you are not submitting the bill then it will be taxable for you as telephone allowance.
Extra allowance of Rs 500 will be taxed in the hands of employee. This need to be distingush from the Telephone allowance which is paid other than the Salary component.