Expense Reimbursement policy in India

Modified on: Mon, 15 Sep, 2025 at 8:56 PM

TABLE OF CONTENTS

Submission Timelines
Eligible Expense Categories
Documentation Requirements
Tax-Free Reimbursement Examples
Per Diems and Taxability
Entertainment and Gift Expenses
Health & Wellness Reimbursements
VAT on Reimbursable Expenses

Business expense reimbursements in India are managed through the Horizons platform, allowing both employees and employers to upload claims. This ensures a streamlined and compliant process for reimbursing work-related costs.

Submission Timelines

On-Time Submission: Expenses uploaded and approved by the line manager before the 15th of the month will be reimbursed with the same month’s salary.
Late Submission: Expenses uploaded or approved after the 15th will be reimbursed with the next month’s salary, paid on the last day of the following month.

Eligible Expense Categories

Reimbursable expenses for business operations include:

Travel expenses (including mileage, tolls, parking)
Communication expenses (mobile, internet)
Entertainment expenses (client meals, events)
Training expenses (seminars, courses, memberships)

Documentation Requirements

To ensure tax-free reimbursement, all expense claims must be supported by valid documentation:

Invoices or bills must clearly show:
- The nature of the expense
- The payer’s name (must match the employee’s name)
Invoices are generally required.
Parking tickets and tolls must be submitted separately from mileage logs and include receipts.

Tax-Free Reimbursement Examples

With proper documentation, the following expenses can be reimbursed tax-free:

Vehicle expenses: Fuel receipts, car maintenance invoices
Telephone expenses: Internet bills, mobile recharge bills
Food coupons: No bills required for exemption

Per Diems and Taxability

Per diems may be taxable depending on the client’s policy.
Food coupons are exempt from tax and do not require receipts.
National and international per diem rates for 2025 are subject to client-specific guidelines.

Entertainment and Gift Expenses

Client entertainment, team gatherings, and gifts must comply with the client’s tax policies and internal compliance guidelines. These rules vary and must be aligned with the company’s approach to taxable benefits.

Health & Wellness Reimbursements

Only medical bills are eligible under Section 80D (Health Checkup).
The maximum exemption limit is Rs. 5,000.
Other wellness-related expenses (e.g., gym, therapy, yoga) are not reimbursable under current tax guidelines.

VAT on Reimbursable Expenses

VAT may apply to reimbursable expenses depending on the nature of the expense and the vendor. This is subject to local tax laws and client-specific accounting practices.

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