Are Reimbursements Part of Salary and Should They Appear on Form 16 and Payslips?

a) As per law, are reimbursements considered as part of the salary or not?

b) Can we show them in Form 16 and on the payslip? If not, why?

Dear friend,

a) As per the law, are reimbursements considered as a part of the salary or not?
b) Can we include them in Form 16 and on the payslip? If not, why?

Salary and its components are exhaustively defined under the INCOME TAX RULES. Regarding Form 16, the format is standard and available under the schedule to the IT Act/Rule. Please refer to the same for further clarity.

Regards,
mxsingh

a) Subsection 17(2) on perks does not provide a clear picture of whether it is considered part of the salary or not.

b) I wish to understand the impact of including the reimbursement component in the payslip.

c) Form 16 does not specify where reimbursements should be categorized. We have exemptions for allowances, but it does not cover all reimbursement areas.

Hi Prabhu,

[a] Subsection 17(2) on perks does not provide a clear picture of whether it is considered part of the salary or not.

[b] I wish to understand the impact of including the reimbursement component in the payslip. Reimbursements should not be included in the payslip. Why? Because it is contingent upon the submission of bills for the same, whether they are medical or other expenses. Therefore, it is not appropriate to include them in the payroll slip.

Cheers,
Rajat

I think some companies put the reimbursement component in the payslip but do not want to show it in Form 16. What are your comments on this?

If you have a reimbursement policy, please send the same to me. Many thanks.