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Taxability of telephone reimbursement provided to employees

If an organization reimburses telephone expenses to its employees, is the reimbursement non-taxable?

Yes, telephone reimbursement provided to employees is not taxable. This is as per Rule 3(7)(ix) (reproduced below) of the Income Tax Rules.

The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arm’s length transaction as reduced by the employee’s contribution, if any:

Provided that nothing contained in this clause shall apply to the expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer.

Rule 3(7)(ix) states that telephone reimbursement is non-taxable in the hands of the employee. However, the following conditions are to be considered in this regard.

1. Telephone connection includes both land line and mobile connections. While there is no explicit reference to data card connection in Rule 3(7)(ix), some experts opine that data card falls under the mobile phone category since a data card is just a SIM card.

2. There is no explicit reference to the maximum number of connections allowed, in the rule. Organizations typically allow one land line and one mobile connection under Telephone Reimbursement for each employee.

3. The connections have to be in the name of the employee.

4. Employees should submit telephone bills to their organization while seeking telephone reimbursement.

5. Expenses incurred towards both pre-paid and post-paid mobile connections are admissible for tax exemption.

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16 Comments

  1. Avinash December 17, 2014

    What about the internet / data charges with the mobile bill. So many peoples are using internet in their bill and there is a consolidated bill for phone call charges and data uses charges. Is there any such provision that only phone call charges are allowed and internet charges are not allowed for reimbursement ?

    reply
    • gautham December 24, 2014

      No, there is nothing in the law which prohibits data charges.

      reply
  2. shiv nath prasad December 29, 2014

    please tell me prepaid mobile bill can paid on behalf of cashmemo

    reply
    • gautham January 9, 2015

      We are unable to understand your question. Can you please rephrase it?

      reply
  3. Mohit Goyal January 29, 2015

    What about data plans from non-mobile operators like Tikona?
    Whether postpaid internet connection from Tikona is covered under telephone/mobile reimbursements?

    reply
    • gautham February 13, 2015

      There is nothing in law which prohibits this.

      reply
  4. Anurag Jain February 10, 2015

    I’ve landline bills where the address is not where I’m currently employed. Am I eligible for getting the tax exemption for the same ?

    reply
    • gautham February 13, 2015

      There is nothing in the law which prohibits this. There is no reference to the address in the land line bills, in law. If your employer reimburses the land line expense, they can exempt it from income tax.

      reply
  5. Surya Mukherjee February 19, 2015

    Hi,

    In case employee is getting reimbursed for the telephone expenses from the employer, can he still claim the tax exemption on the same bills.

    Thanks & Regards,
    Surya

    reply
    • gautham February 24, 2015

      Yes, the telephone expenses reimbursed will not be taxable.

      reply
  6. Mukund February 28, 2015

    My company has rejected my telephone bills which is submitted for reimbursement.
    Reason they say is Invalid Bill.
    How can the company reject my telephone bills for reimbursement?

    reply
    • gautham March 19, 2015

      If your company believes that the telephone bill you submitted is not valid, only they can specify the reason. Please check with your company in this regard.

      reply
  7. Rony March 19, 2015

    telephone expenses of previous FY can be claimed in this FY, if not claimed before?

    reply
    • gautham March 19, 2015

      Organizations typically do not accept previous years’ receipts for reimbursement in the current year.

      reply
  8. Rahul Singh April 2, 2015

    Hi,

    Is there any limit / amount per month for the telephone reimbursement ?

    reply

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