12 February 2016
Dear Experts please advise me on this;
An employee of a company frequently travels on official duty.The employee is eligible to hire cabs for his local conveyance. For booking cabs he uses mobile apps (OLA for ex.). The cab operator gives discount coupons for using mobile app.
Now for example, if the employee hires a cab and the gross charges amounts to Rs.150/- and net charges paid by him is only Rs.100/- after deducting a discount coupon offer of Rs.50/- , how much he is eligible in his claim for reimbursement ?
13 February 2016
"A reimbursement is a repayment for money you've already spent." When you travel for work, you get a reimbursement for your work-related expenses, like hotel bills and plane tickets, but you'll have to pay for that trip to the circus yourself.
Therefore a reimbursement should not result in a profit to the person claiming it. In your example therefore, the employee should be reimbursed only Rs.100/- and not Rs.150/-.
Secondly, from the employee's point of view, any amount he receives in excess of his work-related expenses is "Profit in Lieu of Salary". This amount is taxable in the hands of the employee and the employer is required to deduct tax at source on such sums.
Therefore both from the legal point of view and practice the reimbursement should be restricted to only the amount actually spent by the employee.
CAclubindia
