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Queries Flexi Benefit Plans in and compensation Salary Structure
#1
Dear seniors and Experts,

When I was surfing I came across this wonderful Knowledge temple. I am very glad to be a member in this a precious one. First and Foremost I would like to say big thanks to the one who initiated this wonderful forum and also appreciated who have contributed and keeping on sharing their valued information from time to time. Let me introduce myself, this is Kumar working as a Sr.Finance & HR Executive in Mid Size organization. This is my first post and came up with lots of questions .I believe ,I will get the appropriate answers for the same from our senior professionals. Really these answers are indeed useful to move forward in my professional carrier. I would be very grateful to all, if can provide the appropriate answers for same.

Questions as follows:

1. Under which section Medical Reimbursement can be given an exemption?

2. Is Medical Reimbursement U/S (2) and Medial Allowance U/s 10 are same?

3. Can we pay Medical Reimbursement to employees by booking as expenditure in employer books of accounts under Staff Medical Reimbursement A/c upon submission of Bills? Is it acceptable practice from Income Tax view?

4. Can we consider if the bills are not in the name of employee? For example: if amount spends by his or her parents /dependents naturally bills will not be on the name of employee. Further, can we consider General medical expenses/Lab Testing/X-Ray & Scanning Report/Doctor Consultation etc.?

5. Under which section Food Coupons & Gift Vouchers can be given an exemption in Form 16? Can we show the same in Form -16?

6. Do we need to add the Sodexo and Gift Vouchers to Gross salary I order give an exemption? As both are not in nature of reimbursement.

7. Can we show Sodexo (Food/Gift Vouchers) as a deduction in Pays slips?

8. In our company practice we are adding Sodexo to Gross salary and showing an amount of Rs. 1100/- as deduction in pay slips likewise P.F, PT, TDS. Is it correct practice?

9. We are placing the order for Sodexo on monthly basis based on the particular month requirement. When we passing the necessary entries in our books of accounts (compound general entry) we are crediting the amount to Staff Welfare - Food Coupons A/c. While placing the order, we are debiting the amount to above head of account. Here, head of account will be zero as we are debiting and crediting the amounts. With a result expenditure will not be booked in books of accounts. Is it correct practice from Income Tax? If not kindly guide us for correct procedure? I understand that few companies are booking under company expenditure as Staff Welfare-Food & Gift Coupons A/c and issuing cheque to receptive vendor (Sodexo/Ticket Restaurant) by deducting TDS @ 2% U/s 194C. Is it correct practice? In both cases which one would be acceptable from Income Tax Prospective?

10. Under which head of account driver salary to be accounted in employer books of accounts? How much we can pay maximum extent under this head to an employee?


11. Can we show Telephone, Fuel, Driver Salary, and Books & Periodicals as FBP in CTC while issuing an offer letter to an employee?


12. Is FBP suggestible only for higher Tax Bracket associates?

13. In case if an employee joined during Feb and he did not avail the exemption under Medical Reimbursement at his previous employer, can present employer give the exemption of total sum which is Rs. 15000/- ?

14. Can we show Gratuity as a part of CTC? If the same in CTC do we need to face any issues form statutory authorities?

15. For reimbursing of Driver Salary what kind of proof do we need to consider?

Your Kind support in this regard would be greatly appreciated.


Yours faithfully,
Kumar
 
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#2
Dear Kumar,

First of all welcome the forum.

Following are query by query answers. Hope this will help you.


1. Under which section Medical Reimbursement can be given an exemption?

Medical Reimbursement is exempted under Income Tax Act. To know under which section, i would request you to visit income tax website and find out

2. Is Medical Reimbursement U/S (2) and Medial Allowance U/s 10 are same?

Medical reimbursement is not taxable if employee submits medical bills for the same and in case of medical allowance, it is an allowance and taxable.

3. Can we pay Medical Reimbursement to employees by booking as expenditure in employer books of accounts under Staff Medical Reimbursement A/c upon submission of Bills? Is it acceptable practice from Income Tax view?

This query is more related to accounts hence can not answer

4. Can we consider if the bills are not in the name of employee? For example: if amount spends by his or her parents /dependents naturally bills will not be on the name of employee. Further, can we consider General medical expenses/Lab Testing/X-Ray & Scanning Report/Doctor Consultation etc.?


Employee can submit medical bills for his parents / spouse/ Kids / dependent members. Also all sort of medical expenses should be considered


5. Under which section Food Coupons & Gift Vouchers can be given an exemption in Form 16? Can we show the same in Form -16?


Below is the abstract form Income tax regarding food coupons.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.


Also request you to go through my blog post on food coupons which will help you to know more about food coupons.

http://hrsuccesstalk.com/2013/12/01/5-fa...lications/




6. Do we need to add the Sodexo and Gift Vouchers to Gross salary I order give an exemption? As both are not in nature of reimbursement.

You should better show them as other benefits to employee.




7. Can we show Sodexo (Food/Gift Vouchers) as a deduction in Pays slips?

It is not deduction but other benefits to employee hence should be shown as other benefits in salary slip




8. In our company practice we are adding Sodexo to Gross salary and showing an amount of Rs. 1100/- as deduction in pay slips likewise P.F, PT, TDS. Is it correct practice?

I do not think that it is correct way to present it.


9. We are placing the order for Sodexo on monthly basis based on the particular month requirement. When we passing the necessary entries in our books of accounts (compound general entry) we are crediting the amount to Staff Welfare - Food Coupons A/c. While placing the order, we are debiting the amount to above head of account. Here, head of account will be zero as we are debiting and crediting the amounts. With a result expenditure will not be booked in books of accounts. Is it correct practice from Income Tax? If not kindly guide us for correct procedure? I understand that few companies are booking under company expenditure as Staff Welfare-Food & Gift Coupons A/c and issuing cheque to receptive vendor (Sodexo/Ticket Restaurant) by deducting TDS @ 2% U/s 194C. Is it correct practice? In both cases which one would be acceptable from Income Tax Prospective?


This query is more form accounts perspective hence can not answer

10. Under which head of account driver salary to be accounted in employer books of accounts? How much we can pay maximum extent under this head to an employee?

Can not answer as it is again more related with accouts



11. Can we show Telephone, Fuel, Driver Salary, and Books & Periodicals as FBP in CTC while issuing an offer letter to an employee?

Yes, we can show it as CTC


12. Is FBP suggestible only for higher Tax Bracket associates?

Correct


13. In case if an employee joined during Feb and he did not avail the exemption under Medical Reimbursement at his previous employer, can present employer give the exemption of total sum which is Rs. 15000/- ?

Yes

14. Can we show Gratuity as a part of CTC? If the same in CTC do we need to face any issues form statutory authorities?

You may or may not. choice is yours. No statutory authority will make any objection on it

I would also request you to go through my following blog post on gratuity to help you get detailed answer of your query.

http://hrsuccesstalk.blogspot.com/2013/0...tuity.html






15. For reimbursing of Driver Salary what kind of proof do we need to consider?

Salary payout to Driver by employee. Employee should have a car and Driving licence of driver.

Govind Singh Negi
HR Professional- Sr Management
Follow at twitter: @govindsinghneg3 https://twitter.com/govindsinghneg3
Catch on Facebook: http://www.facebook.com/pages/HR-Success...2717854041
 
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#3
(22-03-2014, 11:34 PM)govindsinghnegi Wrote: Dear Kumar,

First of all welcome the forum.

Following are query by query answers. Hope this will help you.


1. Under which section Medical Reimbursement can be given an exemption?

Medical Reimbursement is exempted under Income Tax Act. To know under which section, i would request you to visit income tax website and find out

2. Is Medical Reimbursement U/S (2) and Medial Allowance U/s 10 are same?

Medical reimbursement is not taxable if employee submits medical bills for the same and in case of medical allowance, it is an allowance and taxable.

3. Can we pay Medical Reimbursement to employees by booking as expenditure in employer books of accounts under Staff Medical Reimbursement A/c upon submission of Bills? Is it acceptable practice from Income Tax view?

This query is more related to accounts hence can not answer

4. Can we consider if the bills are not in the name of employee? For example: if amount spends by his or her parents /dependents naturally bills will not be on the name of employee. Further, can we consider General medical expenses/Lab Testing/X-Ray & Scanning Report/Doctor Consultation etc.?


Employee can submit medical bills for his parents / spouse/ Kids / dependent members. Also all sort of medical expenses should be considered


5. Under which section Food Coupons & Gift Vouchers can be given an exemption in Form 16? Can we show the same in Form -16?


Below is the abstract form Income tax regarding food coupons.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.


Also request you to go through my blog post on food coupons which will help you to know more about food coupons.

http://hrsuccesstalk.com/2013/12/01/5-fa...lications/




6. Do we need to add the Sodexo and Gift Vouchers to Gross salary I order give an exemption? As both are not in nature of reimbursement.

You should better show them as other benefits to employee.




7. Can we show Sodexo (Food/Gift Vouchers) as a deduction in Pays slips?

It is not deduction but other benefits to employee hence should be shown as other benefits in salary slip




8. In our company practice we are adding Sodexo to Gross salary and showing an amount of Rs. 1100/- as deduction in pay slips likewise P.F, PT, TDS. Is it correct practice?

I do not think that it is correct way to present it.


9. We are placing the order for Sodexo on monthly basis based on the particular month requirement. When we passing the necessary entries in our books of accounts (compound general entry) we are crediting the amount to Staff Welfare - Food Coupons A/c. While placing the order, we are debiting the amount to above head of account. Here, head of account will be zero as we are debiting and crediting the amounts. With a result expenditure will not be booked in books of accounts. Is it correct practice from Income Tax? If not kindly guide us for correct procedure? I understand that few companies are booking under company expenditure as Staff Welfare-Food & Gift Coupons A/c and issuing cheque to receptive vendor (Sodexo/Ticket Restaurant) by deducting TDS @ 2% U/s 194C. Is it correct practice? In both cases which one would be acceptable from Income Tax Prospective?


This query is more form accounts perspective hence can not answer

10. Under which head of account driver salary to be accounted in employer books of accounts? How much we can pay maximum extent under this head to an employee?

Can not answer as it is again more related with accouts



11. Can we show Telephone, Fuel, Driver Salary, and Books & Periodicals as FBP in CTC while issuing an offer letter to an employee?

Yes, we can show it as CTC

(Can we show all in salary slip?)

12. Is FBP suggestible only for higher Tax Bracket associates?

Correct

(Can only applicable for few whose tax is higher side, not for all?)

13. In case if an employee joined during Feb and he did not avail the exemption under Medical Reimbursement at his previous employer, can present employer give the exemption of total sum which is Rs. 15000/- ?

Yes

14. Can we show Gratuity as a part of CTC? If the same in CTC do we need to face any issues form statutory authorities?

You may or may not. choice is yours. No statutory authority will make any objection on it

I would also request you to go through my following blog post on gratuity to help you get detailed answer of your query.

http://hrsuccesstalk.blogspot.com/2013/0...tuity.html






15. For reimbursing of Driver Salary what kind of proof do we need to consider?

Salary payout to Driver by employee. Employee should have a car and Driving licence of driver.

11. Can we show Telephone, Fuel, Driver Salary, and Books & Periodicals as FBP in CTC while issuing an offer letter to an employee?

Yes, we can show it as CTC

(Can we show all in salary slip?)

12. Is FBP suggestible only for higher Tax Bracket associates?

Correct

(Can only applicable for few whose tax is higher side, not for all?)
 
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