Configure & Process Payroll Reimbursements

Reimbursement Expenses

EXPENSE MANAGEMENT

Reimbursement Expenses

Track ad-hoc reimbursement expenses against policies, approvals, and budgets with full visibility for employees and finance.

Expenses
👥 WHO USES THIS
â–¸Employees submitting expense claims
â–¸Finance auditing expenses
â–¸Managers approving reimbursements
✨ WHAT YOU'LL ACHIEVE
â–¸Submit and track expenses easily
â–¸Route for approval automatically
â–¸Close the loop on payouts

All approved reimbursement amounts are treated as non-taxable,provided valid proof or supporting documents are submitted as per the organization policy.

Expenses Type Configuration

Navigate to Payroll → Reimbursement -> Expense Types 

In the reimbursement module, the first step is to configure the expense types that the organization follows. This involves defining the types of expenses eligible for reimbursement along with their specific details. 

Adding Expense Types

Provide the Expense Title (e.g., Travel, Accommodation, Medical).

Specify the Coverage criteria, which can depend on the designation or grade level of employees.

Select whether the expense qualifies as a prerequisite (a taxable or non-taxable benefit).

Defining Coverage Details

Under the expense type coverage, specify the designations or grades eligible for the expense type.

Saving the Configuration
Once all details are filled in, save the configured expense type to make it available for employees to claim reimbursements.

This configuration ensures that the reimbursement process aligns with organizational policies and provides clarity on eligibility and limits for different expense categories.

Payroll Consideration

There are two options available for handling reimbursement expenses:

  1. Process Reimbursements along with the Regular Payroll Run

  2. Handle Reimbursement Separately(outside payroll run)

  • Navigate to Organization → Organization Settings.

  • Click the Edit icon. Locate the option Process Reimbursement as a part of the payroll flag.

  • Enable or disable the flag as per your requirement. Enabled- Reimbursement expenses will be included in the regular payroll run and displayed under the Earnings section of the payslip as non-taxable.Disabled- Reimbursements will not be included in the payslip and will need to be processed separately, outside the regular payroll run.

  • Click Submit to save the changes.


Fig: Reimbursement- Expenses Type Configuration


Fig: Process Reimbursement as a part of Payroll


Fig: Expense Types - Add

Fields Description 

Title

Description

Expense Title

Refers to the expense the employee claims 

Coverage

It refers to how an expense is applied based on different criteria within an organization. The coverage determines which employees are eligible for expense based on grade, grade & location employee level, etc.

  • Designation - The expenses apply to the specified designation within the entire organization.

Example: Expense applied for Marketing Staff, Managerial Cadre 

  • Grade- The expense  is applicable based on the employee’s job grade or level within the organization.

Pre Approval Required

Enabling this flag will mandate obtaining prior approval before claiming the expense.

Invoice Date Restriction 

Enabling this flag will restrict the employees to submit the invoices with date in the current payroll period 

Perquisites

Refers to a non-cash benefit or privilege provided to employees by their employer for specific purposes like accommodation , club expenses, free education, holiday expense  which may include tax implications depending on the nature of the benefit.

Maximum Amount

This refers to the maximum amount limit that can be utilized for reimbursable expenses. It defines the cap set by the organization, beyond which expenses cannot be claimed for reimbursement.

Unit

This refers to how the expense is categorized or mapped based on the frequency of utilization, such as:

  • Per Day: The expense limit is set for each day (e.g., daily meal allowance).

  • Per Month: The expense is mapped to a monthly limit (e.g., monthly travel allowance).

  • Per Claim: The limit applies to each individual claim submitted (e.g., per trip reimbursement).

  • Per Annum: The expense limit is defined on an annual basis (e.g., annual health check-up allowance).

Reimbursement Allowances

Certain components of salary are associated with reimbursements, where employees are required to submit supporting bills/proofs to claim them as non-taxable.

  • Monthly Submission: If the employee submits valid bills/proofs for the reimbursement allowance (e.g., telephone, fuel, medical), the approved amount will be treated as non-taxable in payroll. Any balance amount (if the bill is less than the allowance) will be treated as taxable for that month.

  • No Monthly Claim: If the employee does not submit any bills during the financial year, the entire reimbursement allowance will be paid out in the last payroll month of the financial year (March) and treated as fully taxable.

  • Partial Claim: If bills are submitted for some months but not others, only the unclaimed portion will be added to taxable salary during the payroll run.

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