FLEXIBLE BENEFIT PLAN (FBP)
Flexible Benefit Plan (FBP) is nothing but the reimbursement which are not taxable at the hands of the employee, but which is a part of their
compensation. Following are the FBP components one employee can opt for. These are:
Leave travel allowance
Home landline telephone bills reimbursement
Personal mobile bills reimbursement
The employee has to declare and submit the FBP declaration form at the time of joining or at the beginning of the financial year wherein he can opt
for the above FBP components as a part of their compensation. This amount is only payable against the submission of claims by the employee. If
the employee is not is not claimed any of the component in a particular month, the said entitled amount will not be paid along with the salary and will
be carry forwarded to the next month. In case if the employee does not submit a claim even at the end of the year, the total unclaimed amount will
be paid EX – GRATIA, which is taxable.
All the employees who have declared the FBP should submit their respective claims in a specified claim format and has to be submitted to the hr on
or before 25 of every month. Hr in turn will obtain the approval of the managing director and the same will be forwarded to the payroll department
for processing claims.
The term medical reimbursement means reimbursement of amount for the expenditure incurred by an employee on the medical treatment and
medical expenses for self and dependent members of their family.
What kind of expenses can an employee claim for medical reimbursement?
The claim can be made for the expenditure incurred on the following grounds:
Purchase of medicines
Medical investigations and diagnostics
Fees paid to medical hospitalization
Psychiatric and family counseling charges
Ophthalmic treatment (powered spectacles and contact lenses)
Physiotherapy and dental treatment
Following however, cannot be claimed as medical reimbursement:
Toiletries, cosmetics and items of personal hygiene
Mineral water and health drinks/beverages
To what extent medical reimbursement can be claimed?
Total medical reimbursement of Rs.15,000/- per annum can be claimed
How can an employee claim for the same?
Employee has to ensure that the following steps to be followed before for submission of the claims.
Employee to declare FBP declaration from at the time of joining/ at the beginning of the financial year
All claims should be duly filled in the specified claim form
All the claim form should be supported by the original supporting documents
The claim form should be duly signed by the employee
All bills are neatly stapled along with the claim form
The claim for should be approved by the managing director before the same is forwarded to payroll department for processing the claim.
Note: in case if the employee has already declared the medical reimbursement thru FBP declaration form but not submitted the claim even at the
end of the financial year, then the declared amount will be processes as EX – GRATIA which is fully taxable at the hands of the employee.
LEAVE TRAVEL ALLOWANCE
As per the income tax laws employees can claim travel expenses incurred by the employee and his family only for travel fare incurred from the one
place to the another place by the shortest possible route. For the purpose of LTA an employee can travel twice in a block of four years.
What kind of expenses can an employee claim for LTA?
An employee claim can include only the actual travel fare from one place to another incurred for himself and his family by the shortest possible route
of the class of public transport.
To what extent LTA can be claimed?
There is no limit specified by the income tax laws for claiming LTA. However an employee can claim to the extent of his eligible special allowance of
How can an employee claim for the same?
An employee can claim LTA by producing the original bills subject to the following:
Carry-over concession – If an employee has not availed travel concession or assistance during any of the specified four-year block periods on one
of the two permitted occasions (or on both occasions) exemption can be claimed in the first calendar year of the next block (but in respect of only
one journey). This is known as carry-over concession. In such case the exemption so availed will not be counted for the purpose of claiming the
future exemptions allowable in respect of 2 journeys in the subsequent block.
For example, the employee has not availed LTA benefit at least once in the block of 2002-2005; he can claim the carry-over concession in the
calendar year 2006. if he claims the LTA benefit in 2006 this will not be counted for the purpose of exemptions in the block 2006-2009. i.e., the
employee can claim LTA on 2 journeys performed in 2006-2009 irrespective of whether he claimed the carryover benefit in 2006 for the block of
The quantum of exemption – it is limited to the actual expenses incurred on the journey. Exemption is strictly limited to expenses on air fare, rail fare
bus fare only. No other expenses like scooter charges at both ends porter age expenses during the journey and lodging/boarding expenses will
qualify for exemption.
Circuitous route – where the journey is performed by a circuitous route the exemption is limited to what is admissible by the shortest route. Likewise
where the journey is performed in a circular form touching different places, the exemption will be limited to what is admissible for the journey from
the place of origin to the farthest place reached by the shortest route.
Conditions of exemption – the exemption is subject to the following conditions (as per rule 2B)
Different situations Amount of exemption if journey is performed
on or after 1 October 2006
Amount of air economy fare of the national carrier by the shortest route
Where journey is performed by air or the amount spent whichever is less.
Where journey is performed by rail Amount of air-conditioned first class rail fare by the shortest route or the
amount spent whichever is less.
Where the places of origin of journey and destination are connected by Amount of air conditioned first class rail fare by the shortest route or the
rail and journey is performed by any other mode of transport amount spent, whichever is less.
Where is places of origin of journey and destination (or part thereof) are First class or deluxe class fare by the shortest route or the amount
not connected by rail spent, whichever is less
Where a recognized public transport exists Air conditioned first class rail fare by the shortest route (as if the journey
had been performed by rail) or the amount spent, whichever is less.
Where no recognized public transport system exists
Note: in case if the employee has already declared the LTA thru FBP declaration form but not submitted the claim even at the end of the financial
year, then the declared amount will be processed as EX – GRATIA which is fully taxable at the hands of the employee.
HOME LANDLINE TELEPHONE & PERSONAL MOBILE PHONE BILLS REIMBURSEMENT
Employees can claim by declaring the same in the FBP declaration form.
The eligible amount of telephone and mobile reimbursement depends on the company policy. However the claim should be to the extent of rental
and local calls and will not include any STD and ISD calls.
The employee can claim for telephone and mobile reimbursement by producing the original bills and also all bills are neatly stapled along with the
Note: in case if the employee has already declared the telephone and mobile reimbursement thru FBP declaration form but not submitted the claim
even at the end of the financial year, then the declared amount will be processed as EX – GRATIA which is fully taxable at the hands of the
Employee can opt for the food coupons to the extent of Rs.13, 200/- per annum (Rs.1,100/- per month) which will help to reduce the tax. A
declaration form annexure b has to be submitted by the employee stating that he will be opting for the food coupons at the time of joining or on a
quarterly basis, since then company has to order for the food coupons once in a quarter.
The food coupon has to be issued to the employee who has opted for the food coupon at the beginning of the month by the hr and signature of the
employee has to be obtained in a food coupon register.
The signed food coupon declaration form by the employee will be sent across by hr to payroll department, so that the food coupon amount will be
deducted from the salary of respective employee.