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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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80 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
  9. Vipin June 19, 2015

    Hi,
    I have changed organization & joined new organization on June 1st, my current organization do not accept mobile bills of May 2015 saying as per income tax rule 1961, 26A we can not accept this however they are considering previous employer salaries for tax deduction. Can you please suggest as per income tax act ?
    Regards,
    Vipin

    reply
    • gautham June 28, 2015

      Your organization is correct in accepting your previous employment salary details and not accepting your mobile bills pertaining to the previous employment.

      reply
  10. swati July 15, 2015

    is there any max amount of reimbursement as per IT or can we claim actual amount.

    reply
    • gautham July 16, 2015

      There is no maximum amount. You can claim tax benefit to the extent of the actual amount.

      reply
  11. Ritesh Kumar July 20, 2015

    Hi,

    Can i claim telephone bills of 01/02/2015 to 28/02/2015(F.Y. 2014-15) which is generated on 3rd Mar 2015 as a salary reimbursement in July 2015(F.Y. 2015-16).

    Kindly suggest whether we can claim or not?

    reply
    • gautham July 20, 2015

      You should have made the claim in FY 2014-15 itself. Your organization is not likely to accept your claim in FY 2015-16.

      reply
  12. ramsaran July 23, 2015

    my mobile expense reimbursement taxable from employer in form 16. can be i claim for exemption in gross income in ITR at the time of filling.

    reply
    • gautham July 23, 2015

      No, you cannot. The tax benefit can be provided only by the employer.

      reply
  13. Reneesh October 10, 2015

    Landline bill is in the name of my parents. Can i use those bills for my telephone reimbursement.? Please reply ASAP.

    reply
    • gautham October 11, 2015

      No, you cannot. The bills should be in your name.

      reply
  14. Vinoth October 13, 2015

    How to Claim the Telephone Reimbursement for Prepaid Mobile Connections.

    reply
    • gautham October 15, 2015

      You can make the claim by submitting the bill/receipt to your employer.

      reply
  15. Rakesh Sharma October 20, 2015

    I would like to know. If i bought mobile handset. is also comes under reimbursement.?

    reply
  16. sickandar November 4, 2015

    in telephone bill, due amount and this month charges is available. some time both are differ in amt. which amt is considered for reimbursement in this case.

    reply
    • gautham November 5, 2015

      The reimbursement shall be as per the reimbursement rules in your organization.

      reply
  17. Ritesh November 10, 2015

    Hi,
    I have a telephone and vehicle maintenance component in my salary. But what if I don’t want to claim.. Can it be credited as a taxable component in my salary or the amount lapses.
    Please suggest.
    Thanks..!

    reply
    • gautham November 12, 2015

      It depends on your organization’s reimbursement policy. Most organizations pay the unclaimed reimbursement amounts (which are a part of employee compensation) as a taxable salary towards the end of the year.

      reply
  18. Akanksha November 29, 2015

    Is it counted in “income from salary” or in “income from other sources”?

    reply
    • gautham November 30, 2015

      This refers to telephone expenses reimbursed by an employer (income from salary).

      reply
  19. dashang November 29, 2015

    hello, I have telephone allowance . How many mobile and landline bills i can include ? i have 2 prepaid mobile number and 1 landline . Can i include them all ? if yes can i inlude my mothers prepaid bill. its on my name itself.

    reply
    • gautham November 30, 2015

      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.

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

      reply
  20. mohan December 5, 2015

    Sir, As per my pay slip Telephone allowance given for Rs.1000/- pm out of my total salary 30,000/-pm. I have two post paid connections in my name and spent about Rs.700/- to Rs.1200/- pm (used for personal and office). Can eligible to get deduction of telephone bills on payment basis in my Income Tax Return?. ..plz reply

    reply
    • gautham December 17, 2015

      It may not be possible. You need to claim it through your employer.

      reply
  21. VINOD SHARMA December 7, 2015

    Can Staff who are working in telecom companies and getting concessional connection get benefit from payable bills..?

    reply
    • gautham December 17, 2015

      There is nothing in law which prohibits this.

      reply
  22. Sai Kumar January 19, 2016

    Suppose the company is reimbursing mobile expenses incurred for the office purpose seperately.

    apart from this the company is providing mobile allowance as a part of CTC.

    Now this mobile allowance is taxable (or) non taxable to the extent of actual expenses though the company is reimbursing mobile bills for official purpose seperately.

    What is the treatment?

    reply
    • gautham January 19, 2016

      As per the income tax rules, reimbursement of one mobile phone expense is tax free. Hence, the mobile allowance amount you receive shall be taxable. I presume both the mobile connections are in your name.

      reply
  23. Prabu January 25, 2016

    The tax benefit is applicable only for the monthly rental and service tax of the mobile bill/broadband bill or it applies for the actual bills incurred as well? please explain. let say my monthly postpaid rental is rs.299 and usage charge is rs.500 and service tax is rs 100, the total actual bill be rs.899. please explain.

    reply
    • gautham January 25, 2016

      The benefit is available to the extent of the total bill amount including rental, usage charges and taxes.

      reply
  24. Vijay Dangmodekar February 2, 2016

    My company is not accepting Prepaid connection…..even if I am providing Payment Receipt along with supporting Bank statement. Is it right? or prepaid connections cannot be used for telephone reimbursement?

    reply
    • gautham February 3, 2016

      There is nothing in the law which prohibits prepaid connection. Not sure why your employer is not accepting it.

      reply
      • Herminder September 13, 2016

        I have the same concern. Can you provide any Govt web site link where it is mentioned that Prepaid broad connection also aplicable for tax rebate?

        reply
        • gautham September 14, 2016

          The tax rules only refer to telephone connection, which I presume does not exclude prepaid broadband connection.

          reply
  25. Gagan February 9, 2016

    I have a prepaid connection and i use online Portals like Paytm, Mobikwik, Freecharge to recharge my numbers.
    Bills provided by these portals does not mention any name, just include the number on which recharge is done.
    Can i submit these bills for reimbursement??

    reply
  26. Raghavendra A.s February 11, 2016

    Hi ,

    CAn i claim Broadband/Telephone exemption during filing IT returns for FY201516? as close to 18K can be exempted. If yes, how do i do it.Plese guide me.Thanks .

    reply
    • gautham February 12, 2016

      No, you cannot claim it through tax return. The way to do it is through your employer.

      reply
  27. KumarStone February 24, 2016

    Hi,

    I have a fiber optic cable internet connection (Broadband), this connection is with out a telephone number, there is only customer number. My employer is not accepting the bills as the broad band connection does not have a telephone number. Can you please through some light on this as there are many who have such issue and there is no information on the web. I want to save some money and dont want tax to be computed on the allowance that i get from the company.

    Regards
    Kumar

    reply
    • gautham February 26, 2016

      The law explicitly allows only telephone (including mobile) reimbursements to be tax free. This is the reason behind your organization not accepting your broadband bills.

      reply
  28. Vijay March 1, 2016

    If My company dont have policy of reimbursement can i personally claim while doing income tax filing.
    Even i want to know about car maintenance .(Company dont have any policy)

    reply
    • gautham March 9, 2016

      No, you cannot. The company has to do the reimbursement for tax benefit.

      reply
  29. Sara March 8, 2016

    The telephone bill of March month which is normally received only in April. But the company wants me to submit all the bills before 15th March for tax exemption purpose. then How do i claim my March months? bills?

    reply
    • gautham March 9, 2016

      Your company wants you to submit the bills by March 15th because they need to complete the tasks related to tax calculations ahead of March payroll. You could check with your company on whether they can accept bills until a later date before 31st of March. Unfortunately, there is no easy solution to this problem.

      reply
  30. asad zia March 12, 2016

    Company is providing Mobile Postpaid sim registered in the name of company
    Kindly tell the treatment of pay head of telephone expe in deduction from salary in tally erp 9

    reply
    • gautham March 14, 2016

      If the telephone bill is in the name of the company, you cannot claim any tax benefit.

      reply
  31. shruti March 17, 2016

    If the bill is on my husband name and its purchased for my kids usage as both of us are working. But he don’t have this claim policy rule than can i claim that airtime. the address mentioned is my home address

    reply
    • gautham March 17, 2016

      No, you cannot. This bill should be in your name.

      reply
  32. CGM April 20, 2016

    I have 2 mobile bill in my name and one is for myself and another one is for my home. I have no landline connection in my name. Can I claim both number?

    reply
    • gautham April 21, 2016

      You can claim the benefit for one mobile phone connection which is in your name.

      reply
  33. Shubham May 31, 2016

    Hello, I recharge through online portals like freecharge/paytm. How do I get those bills to submit for reimbursement?

    reply
    • gautham May 31, 2016

      If you can submit a printout of the re-charge invoice from the online portal, it should be fine.

      reply
  34. Soma May 31, 2016

    Per the law, is proof of expense (i.e. the mobile bill) sufficient to claim reimbursement or does one also need to produce proof of having paid the bill? Our co. requires us to settle the bill before claiming reimbursement and I am trying to understand if this is just an internal requirement.

    Alternately, if the company proposes to pay mobile reimbursement along with salary, does it have to deduct tax on it?

    reply
    • gautham May 31, 2016

      “Our co. requires us to settle the bill before claiming reimbursement and I am trying to understand if this is just an internal requirement.”

      Ans: The process of reimbursement is as per your organization’s policy. There is no legal requirement in this regard.

      “Alternately, if the company proposes to pay mobile reimbursement along with salary, does it have to deduct tax on it?”

      Ans: The mobile reimbursement shall be tax-free if you submit the mobile bill to your organization.

      reply
  35. naresh June 7, 2016

    if i have two prepaid connection, can i claim each bill in alternative months??
    for example: I have sim1 and sim2. can i claim sim1 bill alone for month1 and sim2 bill alone for month2???

    reply
  36. Anil G. June 27, 2016

    How can you say that telephone allowance is exempt ?
    It is fully taxable.
    For reference check the Income Tax Department page.

    http://www.incometaxindia.gov.in/Charts%20%20Tables/Allowances_Available.htm

    Check column A-20.

    reply
    • gautham June 27, 2016

      If an amount is paid as an allowance under the head Telephone Allowance, it is taxable. If the payment is towards reimbursement of charges incurred for a telephone connection, such a payment is non-taxable as per Rule 3(7)(ix) of the Income Tax Act. When something is paid out as an allowance without any underlying proof of expenditure pertaining to the nature of the allowance, the payment is fully taxable unless it is explicitly exempted by law.

      reply
  37. swati mangal June 27, 2016

    I wish to ask how can anyone claim reimbursement for prepaid number? For prepaid connection, you cannot have any receipt or bill. How is the reimbursement claimed then?

    reply
    • gautham June 28, 2016

      Many outlets provide a receipt of pre-paid connection payments. One could submit a receipt (with the telephone number written) from such an outlet.

      reply
  38. Thangaraj July 28, 2016

    My company is not reimburse my telephone bills, can i claim it myself in efiling…

    reply
  39. Kishore Nayak August 5, 2016

    HI,
    If i have not reimbursed the Landline/Telephone bills from the Public sector company, but i have the bills. Should the Bill amount is exempted from Tax deduction ?

    reply
    • gautham August 6, 2016

      No, you cannot. The reimbursement (and tax benefit) has to be provided by the employer.

      reply

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