Dear Members,
Greetings !!
Please guide me, whether mobile allowance given to any employee can be a part of his CTC or not i.e. he / she has to use his own mobile (SIM) and the company will pay it as fixed amount in his salary.
please revert...
From India, New Delhi
Greetings !!
Please guide me, whether mobile allowance given to any employee can be a part of his CTC or not i.e. he / she has to use his own mobile (SIM) and the company will pay it as fixed amount in his salary.
please revert...
From India, New Delhi
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 now a days even gratuity is included in CTC , which is not a good thing as far as Employees are concerned.
Hope this answer has served ur purpose.
With Regards ,
Sarkar
MBA,Phd(HR),SAP ( HR)
From India, Bangalore
2Whether 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 now a days even gratuity is included in CTC , which is not a good thing as far as Employees are concerned.
Hope this answer has served ur purpose.
With Regards ,
Sarkar
MBA,Phd(HR),SAP ( HR)
From India, Bangalore
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
From India, Delhi
My dear Sarkar
I appreciate your enthusiasm.
What is the policy in your organization regarding "Expenses on official tours" ?
For example, when a sales person visits a number of cities, he travels (by air or train), stays in a hotel (specified according to his level), spends in taxi/travel etc.
Do you consider all this 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 espenses" ?? Is not there a fatal flaw in such thinking ??
I suggest you consult your Finance & Accounts people on some clarity on these expenses and how they are treated financially and in account books.
Kindly re-consider your opinion.
Regards.
From India, Delhi
I appreciate your enthusiasm.
What is the policy in your organization regarding "Expenses on official tours" ?
For example, when a sales person visits a number of cities, he travels (by air or train), stays in a hotel (specified according to his level), spends in taxi/travel etc.
Do you consider all this 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 espenses" ?? Is not there a fatal flaw in such thinking ??
I suggest you consult your Finance & Accounts people on some clarity on these expenses and how they are treated financially and in account books.
Kindly re-consider your opinion.
Regards.
From India, Delhi
Hi Raj ,
Well in my Company we have certain criteria which are fixed as far as Expenses ( Hotel/Train etc) are concerned .
The concerned employee is made aware of this rules during the Induction period , so he/she knows what is his/her Limit regarding the expenses are concerned.
And yes we add this expenses on his/her CTC .
Hope I have answered your Queries.
Kindly let me know if you need to know anything else.
With Regards ,
Sarkar
From India, Bangalore
Well in my Company we have certain criteria which are fixed as far as Expenses ( Hotel/Train etc) are concerned .
The concerned employee is made aware of this rules during the Induction period , so he/she knows what is his/her Limit regarding the expenses are concerned.
And yes we add this expenses on his/her CTC .
Hope I have answered your Queries.
Kindly let me know if you need to know anything else.
With Regards ,
Sarkar
From India, Bangalore
Dear Sarkar
Thanks for your reply.
So your company adds any expenses that an employee undergoes while working for company in his CTC !!
It is not only unfair but illegal as well. I wonder how much it inflates the CTC and makes it un-realistic. For example, especially in Marketing and Sales, employees (Regional Manager/Area manager etc.) are always on the move and entitled for air-fare and at least three star hotels.
In a month a typical Sales/Marketing executive may run up such bill amounting to more than five times of his total salary in a month.
Remember, this money does not go into the pocket of the employees; but are the official expenses incurred during business.
In any books of management, such expenses are called SELLING/MARKETING expenses and are accordingly shown into PROFIT & LOSS ACCOUNT of the Company which are 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.
CTC or Costs To Company does not mean to add all cost which are necessary to run the business, to be added up in the employee's account.
For example, one can not 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 accounant/Company Auditors.
For convenience, you can take a print-out 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 this official tour expenses ??
HR professionals need to be more knowledgeable and keep upgrading themselves.The reason HR professionals get comparatively lower salaries than CA or CS is simply lack of knowledge and skill; and also that CA/CS have a common professional rigorous curriculum administered by an Apex body and recognised by the Government. Consequently, a Finance professional knows more about HR processes and system than a person claiming to be an HR professional, knows about the financial matters related to employees - a situation which I fervently hope would be addressed in future.
Warm regards.
From India, Delhi
Thanks for your reply.
So your company adds any expenses that an employee undergoes while working for company in his CTC !!
It is not only unfair but illegal as well. I wonder how much it inflates the CTC and makes it un-realistic. For example, especially in Marketing and Sales, employees (Regional Manager/Area manager etc.) are always on the move and entitled for air-fare and at least three star hotels.
In a month a typical Sales/Marketing executive may run up such bill amounting to more than five times of his total salary in a month.
Remember, this money does not go into the pocket of the employees; but are the official expenses incurred during business.
In any books of management, such expenses are called SELLING/MARKETING expenses and are accordingly shown into PROFIT & LOSS ACCOUNT of the Company which are 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 be violative of the INDIAN COMPANIES ACT 1956 and the following Accounting Standards which have legal recognition under the Act :Please note, such expenses CAN NOT be added to the CTC of an employee.
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.
CTC or Costs To Company does not mean to add all cost which are necessary to run the business, to be added up in the employee's account.
For example, one can not 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 accounant/Company Auditors.
For convenience, you can take a print-out 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 this official tour expenses ??
HR professionals need to be more knowledgeable and keep upgrading themselves.The reason HR professionals get comparatively lower salaries than CA or CS is simply lack of knowledge and skill; and also that CA/CS have a common professional rigorous curriculum administered by an Apex body and recognised by the Government. Consequently, a Finance professional knows more about HR processes and system than a person claiming to be an HR professional, knows about the financial matters related to employees - a situation which I fervently hope would be addressed in future.
Warm regards.
From India, Delhi
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 and 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 addituion, 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 expense 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 own ways of doing things, irrespective of the fact whether it is legal or not; proper or not.
Warm regards.
From India, Delhi
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 and 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 addituion, 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 expense 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 own ways of doing things, irrespective of the fact whether it is legal or not; proper or not.
Warm regards.
From India, Delhi
I agree with Sh Raj Kumar in totality. HR should and must understand difference between Business Expenses and Employee Benefit. All expenses towards Official Work are part of Business expenses.
Regards,
HC Nagar
From India, New Delhi
Regards,
HC Nagar
From India, New Delhi
Dear
telephone or mobile phone is given to certain people who need to frequently communicate with their superiors, colleagues or the business associates. Without this facility one cannot perform his duty as sales executive,field engineers, etc.
Secondly, the money what one spends on this, is not going to his pocket.
Hence this need not be considered as part of CTC.
V. Balaji
From India, Madras
telephone or mobile phone is given to certain people who need to frequently communicate with their superiors, colleagues or the business associates. Without this facility one cannot perform his duty as sales executive,field engineers, etc.
Secondly, the money what one spends on this, is not going to his pocket.
Hence this need not be considered as part of CTC.
V. Balaji
From India, Madras
I fully agree with the observations made by Mr. Raj Kumar. Perhaps, your exhuberance has had the better of you and you seem to have been swayed by vigours of your enthusiasm when posting your response.
In the instant matter, the Mobile Allowance if treated as a Fixed Allowance and is reflected on the Pay Slip and paid ass part of Salary, then yes it will be construed as being part of the CTC.
On the other hand if expenses against use of Mobilephones for official work is reimbursed aginst 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 for the same ONLY after he completes five years in the organization.
Vasant Nair
From India, Mumbai
In the instant matter, the Mobile Allowance if treated as a Fixed Allowance and is reflected on the Pay Slip and paid ass part of Salary, then yes it will be construed as being part of the CTC.
On the other hand if expenses against use of Mobilephones for official work is reimbursed aginst 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 for the same ONLY after he completes five years in the organization.
Vasant Nair
From India, Mumbai
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