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.
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TDS on reimbursements
Replies (2)
Paying fixed amount as re-imbursements partakes the colour of allowance as it is paid irrespective of providing bills etc. Therefore the same is taxed as perquisite in the hands of the employee.
if they can convince the auditors and management that the amt paid to them were fully used for business purpose with reasonable supportings then it can be fully exempt in the hands of employee
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