Dear Sarkar
Thanks for your reply.
So your company adds any expenses that an employee undergoes while working for company in his CTC !!
It is not only unfair but illegal as well. I wonder how much it inflates the CTC and makes it un-realistic. For example, especially in Marketing and Sales, employees (Regional Manager/Area manager etc.) are always on the move and entitled for air-fare and at least three star hotels.
In a month a typical Sales/Marketing executive may run up such bill amounting to more than five times of his total salary in a month.
Remember, this money does not go into the pocket of the employees; but are the official expenses incurred during business.
In any books of management, such expenses are called SELLING/MARKETING expenses and are accordingly shown into PROFIT & LOSS ACCOUNT of the Company which are prepared and audited by Chartered Accountants.
In the Balance sheet, Net Profit is the amount derived after deducting these expenses. Such expenses, therefore, are Tax deductible.
Showing these expenses anywhere else would be violative of the INDIAN COMPANIES ACT 1956 and the following Accounting Standards which have legal recognition under the Act :
AS 1 : Disclosure of Accounting Policies
AS 3 : Cash Flow Statements
AS 5 : Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS 15 : Employee Benefits
AS 21 : Consolidated Financial Statements
and perhaps several others.
Please note, such expenses CAN NOT be added to the CTC of an employee.
CTC or Costs To Company does not mean to add all cost which are necessary to run the business, to be added up in the employee's account.
For example, one can not add the Cost of a Crane as CTC of the Crane Operator, or the Cost of a Machine as CTC of the machine operator.
As suggested earlier, kindly verify the facts with your Chartered accounant/Company Auditors.
For convenience, you can take a print-out of this, and discuss with them. Hope they will convince you. Moreover, these are not added to the CTC. Have you ever seen a CTC statement that includes all this official tour expenses ??
HR professionals need to be more knowledgeable and keep upgrading themselves.The reason HR professionals get comparatively lower salaries than CA or CS is simply lack of knowledge and skill; and also that CA/CS have a common professional rigorous curriculum administered by an Apex body and recognised by the Government. Consequently, a Finance professional knows more about HR processes and system than a person claiming to be an HR professional, knows about the financial matters related to employees - a situation which I fervently hope would be addressed in future.
Warm regards.