Our company is planning to offer incentives like learning incentive and health incentive ( We are limiting each to Rs.20,000) which would allow employees to claim reimbursements. Example of what can they buy For Learning - Kindle reader, Fiction novels, subscription to magazine For Health - Gym membership, Gym equipment, protein powder, smart watches. Our finance team is of the view that this would be taxable in the hands of employee as perquisite since expenses of employees is being paid by the employer. Is there way to provide these incentives without them becoming Taxable. @Sumit Singla Could you please share your thoughts, saw your comment on a similar post earlier related to relocation allowance. Thank you 😄

https://cleartax.in/g/terms/reimbursement#:~:text=Reimbursements%20are%20also%20made%20in,not%20subject%20to%20any%20taxes. Reimbursements are not taxable in the hands of the employees if they submit proof of such claims (bills)

Hello Rohan, Thank you for your reply. The clear Tax link shared by you providers me only with the meaning and type of reimbursements ( Expenses on activities that required to performed for business like Travel ,food ) and its not clear on Tax point of view. Can you please provide me more details on the Income Tax bit.

Hey Pronoti, basically the reimbursements are not an income for the employees it is a reimbursement for something which they have already spend from their pocket. Since employee is sending the bills for the same as a proof of expense no tax is involved in this case as it is not an income. It is not a perquisite since it is a reimbursement it would have been if it was an allowance. Spending behind employees is company's choice there is no restriction as to what can be taken up by the company and what cannot be. Hope that answers your question

@Pronoti Roy If the employee submits the invoice for reimbursement, the company can reimburse the exact amount back to the employee w/o any taxes as any reimbursements on actual bill is tax exempted.

I agree with Rohan. If you make learning and health as benefits that are reimbursable, people can save tax. For example, if you offer me INR 10,000 as a learning benefit and say that I can claim it to buy books, magazines, coursera courses, or even a Kindle reader, I will need to submit bills to claim it. No tax implication for me as an employee. If you add it to my salary, call it by whatever name you want to, but it will attract tax.

@Pronoti Roy we are considering these as Wfh allowances and its like reimbursement based on the invoice, hence its not attracting any taxes further. you can check this option.

Hey @Pronoti Roy All the reimbursement are always exempted from tax with the supporting invoices. You can reimburse the amount to your employees against their purchases for Learning & health. You can also check with a few services provider who can help you to do this activity for you and your company will also get benefits from it. Please note: Never add the reimbursement amount to the salary. it should be paid separately only.