Pay reimbursement as a fixed or claimed amount

Reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent. Depending on the organization's policy, reimbursement can be paid as a fixed amount every month or as the amount claimed by the employee.

1. First, make sure the salary template has a component defined with the same name as the reimbursement category.

2. Next, add the component in the Salary template, e.g., if you need to give a fixed reimbursement (INR 2000/- pm) for fuel allowance, create a component named Fuel Allowance and define the value as 2000 with the pay frequency as Monthly.

3. Now, create the reimbursement category with the same name, i.e., Fuel allowance, and entitle the employees to it.

4. The reimbursement is now paid to the employee on a monthly basis, and the bills against it can be uploaded by the employee.

5. When payroll is processed, the employee receives the amount defined for the reimbursement component in the salary template. However, if the employee claims the reimbursement against that category, the admin needs to approve the claim.

6. In this case, the employee receives the reimbursement as a non-taxable amount, if the admin approves it.

Note: To allow the exemption against the reimbursement component, you have to make the reimbursement category taxable and enable the option Show in Investment Declaration.

Once the admin approves the claim, the employee is eligible for the exemptions.