How are business expenses handled in India?

Business Expense reimbursements in India are managed through the Horizons platform and the option to upload expense claims is available for the employees as well as the employer(s) to upload on employees’ behalf.

Expense Reimbursement Timelines

  1. On time submission: All expenses which are uploaded and approved by the line manager prior to the 5th of a month are paid out with the salary for the same month.
  2. Late submission: For the expenses which are uploaded and approved after the 5th of a month, the payment will be made on the last day of next month. Hence, any expenses uploaded or approved after the 5th of the month will be paid out with the salary for the next month.

Expense Reimbursement Guidelines

  1. Nature Of Expenses: The expenses should be incurred on categories which are considered necessary to carry out business operations. Common categories for business expenses in India include:
  1. Travel Expenses
  2. Communication Expenses (Mobile, Internet etc)
  3. Entertainment Expenses (Meals with clients, meetings and events, etc)
  4. Training expenses (attending seminars, conferences, membership for courses, etc)
  1. Document requirement: The expense claims logged on to the Horizons portal need to be supported by valid documents. The employees or employers can upload the scanned copies of the original bills/invoices received for the payment they made. The document should reflect the nature of expense and the name of the payer (Employee’s name must be there).
  2. Tax implication: Business expenses incurred under necessary categories to carry out business operations are considered tax-free and paid out in whole. In case there are any expenses which are not classified as business expenses or are not approved by the line manager, the amounts don’t get added to the payout.

For businesses in India, it's essential to establish clear and fair guidelines for expense reimbursements, which are not only compliant with tax laws but also transparent and consistent for all employees. This can reduce the risk of tax implications or disputes over reimbursement claims.

 

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