Amount for expenditure is either given in advance or after the expenses are done by the employee, the amount is then reimbursed on submission of bills. In both cases the amount is tax free unless any form of profit is derived from the amount. In this article, we explain when the amount for expenditure received by the employee is taxable or non taxable.
Expenditure policy differs from organization to organization. Employee who is travelling for performance of official duties is allowed to claim travelling expenses. There are two policies generally followed by organization for these kinds of expenses.
What will be tax implications of these amounts is main concern of every employee. The amount received from employer in form of reimbursement of expenses or advance for expenses is tax-free unless and until that amount is utilised only for expenses on behalf of the employer for discharging official duties. If any profit is derived from these reimbursements then it will be considered as profit in lieu of salary and it will be taxable while computing taxable income of employee. The amount received as salary is taxable and the amount received for expenses is non taxable.
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