Hi Aparna,
I have the following to recommend:
You can also use the "Cafeteria Approach" or Flexi-allowances. Here you assign a total /
consolidated allowances kitty to an individual (which cd be x% of the total cost or basic).
This kitty is flexible in the hands of the employee to assign under heads that he/ she feels will be the likely heads of expense and provides proof of expense to avail the reimbursement (and tax exemption benefit). Each head will need to be assigned an upper limit (can be the same as that governed by the IT lax) e.g. Medical upto Rs 15,000; Prof Devpt upto Rs 25,000 etc.
What is interesting will be the fact that the employees will have the freedom to structure their compensation as per their needs. Typically, younger employees will like to maximize on the cash in hand (and not take any reimbursements) while those with young children may want to maximize on the medical reimbursements and those wanting to travel may want to maximize on LTA. With a flexible structure you are able to address the varying needs of the employees.
Administration of this approach can be a concern but some discipline can go a long way:
1. Employees give their annual plan in the first week of April. The plan can vary each financial year.
2. No changes in the plan during the financial year (unless there is a change in salary for an employee, say mid-year increment/ promotion)
3. In case an employee does not submit a plan, the entire amount can be paid as a taxable allowance.
And you have fantastic flexible product for your employees !
All the best!
shantanuji |
