Dear Members,
Greetings!
Please guide me on whether a mobile allowance given to any employee can be a part of his CTC. For example, if he/she has to use his/her own mobile (SIM) and the company will pay it as a fixed amount in his/her salary.
Please revert...
From India, New Delhi
Acknowledge(0)
Amend(0)
1Greetings!
Please guide me on whether a mobile allowance given to any employee can be a part of his CTC. For example, if he/she has to use his/her own mobile (SIM) and the company will pay it as a fixed amount in his/her salary.
Please revert...
From India, New Delhi
Acknowledge(0)Amend(0)
Hi Robind,
Whether it can be included or not solely depends on that particular org. As far as my knowledge is concerned, if you want to do it, I don't find any problem with doing that because nowadays even gratuity is included in CTC, which is not a good thing as far as employees are concerned. Hope this answer has served your purpose.
With Regards,
Sarkar
MBA, PhD (HR), SAP (HR)
From India, Bangalore
Acknowledge(0)Amend(0)
Whether it can be included or not solely depends on that particular org. As far as my knowledge is concerned, if you want to do it, I don't find any problem with doing that because nowadays even gratuity is included in CTC, which is not a good thing as far as employees are concerned. Hope this answer has served your purpose.
With Regards,
Sarkar
MBA, PhD (HR), SAP (HR)
From India, Bangalore
Acknowledge(0)Amend(0)
Dear robindt1 In your company, is it a "benefit" or by way of "reimbursement" for making official calls or calls related to official business ??
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
My dear Sarkar,
I appreciate your enthusiasm. What is the policy in your organization regarding "Expenses on official tours"? For example, when a salesperson visits a number of cities, he travels (by air or train), stays in a hotel (specified according to his level), and spends on taxi/travel, etc. Do you consider all these expenses as his income/part of salary? Do you add all these to the CTC? Would not that mean all expenses made by an employee in connection with business are not "business expenses"? Is there not a fatal flaw in such thinking?
I suggest you consult your Finance & Accounts people for some clarity on these expenses and how they are treated financially and in the account books. Kindly reconsider your opinion.
Regards.
From India, Delhi
Acknowledge(0)Amend(0)
I appreciate your enthusiasm. What is the policy in your organization regarding "Expenses on official tours"? For example, when a salesperson visits a number of cities, he travels (by air or train), stays in a hotel (specified according to his level), and spends on taxi/travel, etc. Do you consider all these expenses as his income/part of salary? Do you add all these to the CTC? Would not that mean all expenses made by an employee in connection with business are not "business expenses"? Is there not a fatal flaw in such thinking?
I suggest you consult your Finance & Accounts people for some clarity on these expenses and how they are treated financially and in the account books. Kindly reconsider your opinion.
Regards.
From India, Delhi
Acknowledge(0)Amend(0)
Hi Raj,
In my company, we have certain fixed criteria regarding expenses (hotel/train, etc.). The concerned employee is made aware of these rules during the induction period, so he/she knows what his/her limit is regarding expenses. Additionally, we include these expenses in his/her CTC. I hope I have answered your queries. Kindly let me know if you need to know anything else.
With Regards,
Sarkar
From India, Bangalore
Acknowledge(0)Amend(0)
0
0
In my company, we have certain fixed criteria regarding expenses (hotel/train, etc.). The concerned employee is made aware of these rules during the induction period, so he/she knows what his/her limit is regarding expenses. Additionally, we include these expenses in his/her CTC. I hope I have answered your queries. Kindly let me know if you need to know anything else.
With Regards,
Sarkar
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-[B]Response[/B]: The mobile allowance can be part of CTC. However, it should be clearly communicated and documented in the company's policy to avoid any confusion. (1 Acknowledge point)
0
0
Dear Sarkar,
Thanks for your reply.
So, does your company include any expenses that an employee incurs while working for the company in his CTC?
It is not only unfair but also illegal. I wonder how much it inflates the CTC and makes it unrealistic. For example, especially in Marketing and Sales, employees (Regional Manager/Area Manager, etc.) are always on the move and entitled to airfare and at least three-star hotels.
In a month, a typical Sales/Marketing executive may rack up a bill amounting to more than five times his total salary in a month.
Remember, this money does not go into the pocket of the employees; it is the official expenses incurred during business.
In any management books, such expenses are called SELLING/MARKETING expenses and are accordingly shown in the PROFIT & LOSS ACCOUNT of the Company, which is prepared and audited by Chartered Accountants.
In the Balance sheet, Net Profit is the amount derived after deducting these expenses. Such expenses, therefore, are tax-deductible.
Showing these expenses anywhere else would violate the INDIAN COMPANIES ACT 1956 and the following Accounting Standards, which have legal recognition under the Act:
AS 1: Disclosure of Accounting Policies
AS 3: Cash Flow Statements
AS 5: Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS 15: Employee Benefits
AS 21: Consolidated Financial Statements
and perhaps several others.
Please note, such expenses CANNOT be added to the CTC of an employee.
CTC or Cost To Company does not mean adding all costs necessary to run the business to the employee's account.
For example, one cannot add the Cost of a Crane as CTC of the Crane Operator, or the Cost of a Machine as CTC of the machine operator.
As suggested earlier, kindly verify the facts with your Chartered accountant/Company Auditors.
For convenience, you can take a printout of this and discuss with them. Hope they will convince you. Moreover, these are not added to the CTC. Have you ever seen a CTC statement that includes all these official tour expenses?
HR professionals need to be more knowledgeable and keep upgrading themselves. The reason HR professionals receive comparatively lower salaries than CA or CS is simply due to a lack of knowledge and skill, as well as the fact that CA/CS have a common professional rigorous curriculum administered by an Apex body and recognized by the Government. Consequently, a Finance professional knows more about HR processes and systems than a person claiming to be an HR professional knows about the financial matters related to employees - a situation that I fervently hope will be addressed in the future.
Warm regards.
From India, Delhi
Acknowledge(1)Amend(0)
Thanks for your reply.
So, does your company include any expenses that an employee incurs while working for the company in his CTC?
It is not only unfair but also illegal. I wonder how much it inflates the CTC and makes it unrealistic. For example, especially in Marketing and Sales, employees (Regional Manager/Area Manager, etc.) are always on the move and entitled to airfare and at least three-star hotels.
In a month, a typical Sales/Marketing executive may rack up a bill amounting to more than five times his total salary in a month.
Remember, this money does not go into the pocket of the employees; it is the official expenses incurred during business.
In any management books, such expenses are called SELLING/MARKETING expenses and are accordingly shown in the PROFIT & LOSS ACCOUNT of the Company, which is prepared and audited by Chartered Accountants.
In the Balance sheet, Net Profit is the amount derived after deducting these expenses. Such expenses, therefore, are tax-deductible.
Showing these expenses anywhere else would violate the INDIAN COMPANIES ACT 1956 and the following Accounting Standards, which have legal recognition under the Act:
AS 1: Disclosure of Accounting Policies
AS 3: Cash Flow Statements
AS 5: Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS 15: Employee Benefits
AS 21: Consolidated Financial Statements
and perhaps several others.
Please note, such expenses CANNOT be added to the CTC of an employee.
CTC or Cost To Company does not mean adding all costs necessary to run the business to the employee's account.
For example, one cannot add the Cost of a Crane as CTC of the Crane Operator, or the Cost of a Machine as CTC of the machine operator.
As suggested earlier, kindly verify the facts with your Chartered accountant/Company Auditors.
For convenience, you can take a printout of this and discuss with them. Hope they will convince you. Moreover, these are not added to the CTC. Have you ever seen a CTC statement that includes all these official tour expenses?
HR professionals need to be more knowledgeable and keep upgrading themselves. The reason HR professionals receive comparatively lower salaries than CA or CS is simply due to a lack of knowledge and skill, as well as the fact that CA/CS have a common professional rigorous curriculum administered by an Apex body and recognized by the Government. Consequently, a Finance professional knows more about HR processes and systems than a person claiming to be an HR professional knows about the financial matters related to employees - a situation that I fervently hope will be addressed in the future.
Warm regards.
From India, Delhi
Acknowledge(1)Amend(0)
Dear robindt1,
My idea behind my earlier query was to make you understand the difference between an "employee benefit" and a "reimbursable expense".
Since the employee is already using his own SIM and mobile; any flat sum given to him every month with no restriction on calling his family, friends, etc. (without the requirement of production of bills) will definitely be a "benefit" and therefore, a part of CTC.
However, any amount given towards expenses for business calls only should not be a part of CTC.
For example, some companies pay a fixed sum towards employees' personal mobile/telephone expenses, which are part of CTC. In addition, the company gives them a separate mobile (the cost of which is as per eligibility) with a company-procured SIM (having similar numbers and Group Dialling Facility) for office use. This mobile should always be kept switched on, and the bills (within limit/approval) are paid by the company itself (or reimbursed).
Such mobile expenses should not be a part of individual CTC, as they come under business expenses under the Accounting head like "Administrative & Selling expenses".
Hope the concept is clear to you; which was my intention.
How it is done in your company is another matter altogether; as companies have their ways of doing things, irrespective of whether it is legal or not; proper or not.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)
0
0
My idea behind my earlier query was to make you understand the difference between an "employee benefit" and a "reimbursable expense".
Since the employee is already using his own SIM and mobile; any flat sum given to him every month with no restriction on calling his family, friends, etc. (without the requirement of production of bills) will definitely be a "benefit" and therefore, a part of CTC.
However, any amount given towards expenses for business calls only should not be a part of CTC.
For example, some companies pay a fixed sum towards employees' personal mobile/telephone expenses, which are part of CTC. In addition, the company gives them a separate mobile (the cost of which is as per eligibility) with a company-procured SIM (having similar numbers and Group Dialling Facility) for office use. This mobile should always be kept switched on, and the bills (within limit/approval) are paid by the company itself (or reimbursed).
Such mobile expenses should not be a part of individual CTC, as they come under business expenses under the Accounting head like "Administrative & Selling expenses".
Hope the concept is clear to you; which was my intention.
How it is done in your company is another matter altogether; as companies have their ways of doing things, irrespective of whether it is legal or not; proper or not.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user reply provides a sound understanding of distinguishing between employee benefits and reimbursable expenses related to mobile allowances. The explanation is clear and informative. (1 Acknowledge point)
0
0
I agree with Sh. Raj Kumar in totality. HR should and must understand the difference between Business Expenses and Employee Benefits. All expenses towards Official Work are part of Business expenses.
Regards,
HC Nagar
From India, New Delhi
Acknowledge(0)Amend(0)
0
0
Regards,
HC Nagar
From India, New Delhi
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-[response] (1 Acknowledge point)
0
0
Dear,
A telephone or mobile phone is provided to certain individuals who need to frequently communicate with their superiors, colleagues, or business associates. Without this facility, one cannot effectively perform their duties as a sales executive, field engineer, etc.
Secondly, the money spent on this communication tool does not go into one's pocket. Therefore, it should not be considered as part of the Cost to Company (CTC).
V. Balaji
From India, Madras
Acknowledge(0)Amend(0)
A telephone or mobile phone is provided to certain individuals who need to frequently communicate with their superiors, colleagues, or business associates. Without this facility, one cannot effectively perform their duties as a sales executive, field engineer, etc.
Secondly, the money spent on this communication tool does not go into one's pocket. Therefore, it should not be considered as part of the Cost to Company (CTC).
V. Balaji
From India, Madras
Acknowledge(0)Amend(0)
I fully agree with the observations made by Mr. Raj Kumar. Perhaps, your exuberance has had the better of you, and you seem to have been swayed by the vigors of your enthusiasm when posting your response.
In the instant matter, if the Mobile Allowance is treated as a Fixed Allowance and is reflected on the Payslip and paid as part of Salary, then yes, it will be construed as being part of the CTC.
On the other hand, if expenses against the use of Mobile phones for official work are reimbursed against a bill raised for the same, it will NOT be part of the CTC.
Gratuity should not be treated as part of CTC since the employee will be entitled to the same ONLY after he completes five years in the organization.
Vasant Nair
Hi Robind, Whether it can be included or not solely depends upon that particular Org. As far as my knowledge is concerned, if you want to do it, I don't find any problem doing that because nowadays even gratuity is included in CTC, which is not a good thing as far as Employees are concerned. Hope this answer has served your purpose. With Regards, Sarkar MBA, Ph.D. (HR), SAP (HR)
From India, Mumbai
Acknowledge(0)Amend(0)
0
0
In the instant matter, if the Mobile Allowance is treated as a Fixed Allowance and is reflected on the Payslip and paid as part of Salary, then yes, it will be construed as being part of the CTC.
On the other hand, if expenses against the use of Mobile phones for official work are reimbursed against a bill raised for the same, it will NOT be part of the CTC.
Gratuity should not be treated as part of CTC since the employee will be entitled to the same ONLY after he completes five years in the organization.
Vasant Nair
Hi Robind, Whether it can be included or not solely depends upon that particular Org. As far as my knowledge is concerned, if you want to do it, I don't find any problem doing that because nowadays even gratuity is included in CTC, which is not a good thing as far as Employees are concerned. Hope this answer has served your purpose. With Regards, Sarkar MBA, Ph.D. (HR), SAP (HR)
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user reply is mostly correct. Gratuity can be considered as part of CTC. The treatment of mobile allowance in CTC depends on company policy. (1 Acknowledge point)
0
0
Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
CiteHR.AI
(Fact Checked)-[response] Mobile allowance can be part of CTC. Including it is based on company policy. Gratuity in CTC is legal. Always align with labor laws. (1 Acknowledge point)