REIMBURSEMENT IN SALARY STRUCTURE

Dear All ,

Can any one amongst us ,tell where to add the reimbursements bills of employee in salary sheet , weather it should be added to the variable pay ? or TA , because the TA is not included in salary structure in the organization

Dear Shweta Sawale,

Probably you have confused between the terms "salary" and the "reimbursement claim".

The definition of wage or salary is "money that is paid regularly for doing work". A salary slip is issued so that the employer and employee both can keep a record of the work done and remuneration paid for the work.

The definition of reimbursement is "compensation paid for the money already spent". In the course of the work, the employee is required to visit places. The visits incur expenses. When the employee raises a claim, it is called a reimbursement claim. However, it is over and above the salary.

If you start routing the reimbursement claim through the regular salary, then it will get reflected in the salary slip. What gets reflected in the salary slip becomes taxable. However, income tax is paid on the "earnings" and not on the "expenses".

By the way, how many employees raise the claim? On average, not more than 10% of employees raise reimbursement claims. A company should have the means to handle these claims.

Thanks,

Dinesh Divekar

Hello Shweta,
Don't Confuse!!!TA relates to the amount of money paid to workers during a business trip for the journey as well as other expenses however Reimbursement is when a business pays back an employee, client, or other people for money they spent out of their pocket or for overpaid money.
After approval Employee can collect their reimbursement amount from Account Department...

In any organization there is a pay structure on which monthly salary is paid and also the same will be reflecting in pay slip. There is also reimbursement of expenses which is supposed to be business related cost, not personal cost.

Unfortunately there are smart organizations to avoid income tax , some of the personal cost are paid by reimbursement which is not right. Say for TA ( Travelling Allowance ) and if it is fixed amount paid every month should be shown in monthly gross not to be paid as reimbursement to avoid ITAX.

I know one MNC where very senior level employees ( GM & above ) are receiving car fuel reimbursement amounting 250 L per month. Obviously, the entire amount is not spent for official purpose and there is amount spent for personal purpose. They are maintaining log book and at the end of every month they declare the personal portion of spending which is considered as taxable income.

S K Bandyopadhyay ( WB,HOWRAH)
CEO-USD HR Solutions
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