Employee Tax Dilemma: How to Handle Salary Certificates and Reimbursements?

One of our employees has worked for only 3 months with us. During these 3 months, no tax has been deducted from his salary. Please suggest what to do if the employee asks for a salary certificate.

Also, kindly suggest if the reimbursement (conveyance + mobile) also gets credited to the bank along with the salary, is it taxable?

Waiting for a reply...

Thanks,

Sangeeta

A salary certificate can be provided. Conveyance, under certain conditions, is taxable if it is considered part of the salary. If conveyance is provided against various bills as routine expenditure, then it may not be taxable, but regularity should be avoided. Regarding mobile expenses, whether paid in cash or transferred to the bank, they are not taxable provided that bills are obtained from the employee.

Thank you.

Issuing Salary Certificates

Salary certificates can be issued to employees on a monthly basis, detailing components of salary and statutory deductions like PF & ESI for the concerned month. Details of reimbursements for the month need not be included in the salary certificate. It is not advisable to issue one consolidated salary certificate for all three months.

Thanks & Regards,
S. Shanmugaram