Bharat Heavy Electricals Limited

From: Vaijayanti 'Bhattacharjee, GM (HR-Policy I, NIC & TMX), BHEL Corporate Office

To: Head of HR
(1) Bhopal (2) Trichy (3) HEEP & CFFP Haridwar (4) R C Puram Hyderabad (5) EON Bangalore
(6) ISG Bangalore (7) CBU &EPD Bangalore (8) CFP, Rudrapur (9) 1P-Jagdishpur (10) IVP,
Goindwal (11) Jhansi (12) Corp. R&D Hyderabad (13) BAP, Ranipet (14) HERP, Varanasi
(15) EMRP Mumbai (16) PS-HQ(17) PS—Mktg, PMG (18)PS-PEM (19) PS-TS/SSBG (20)
PS- NR (21) PS- ER (22) PS-WR (23)PS- SR (24)1S,10&TBG (25) ROD HQ (26) HRDI (27)
ASSCP- Gurgaon (28) Piping Centre, Chennai (29) CSU & FP Jagdishpur (30) HPVP,
Visakhapatnam (31) PPPU, Thirumayam (32) Corp. Office (33) PE&SD, Hyderabad (34)
RMSG, Bhopal

AA: HR: HR-Manual Dated: 26th August, 2016

Corporate HR Circular No. 019 NVLX/2016

Subject: Review of chapter on Perks & Allowance

As part of the review of Personnel Manual, the existing chapter on Perks &
Allowance has been reviewed and the revised chapter is enclosed.

The provisions shall be applicable from the date of issue of circular.

This issues with the approval of Competent Authority.

(Vaijayanti Bhattacharjee)

Enclosure: a/a

BHEL: TIRUCHY HRM No.HR: CE: 2016 Date: 08.09.2016

Copy communicated to: - 1) All e-mail users thro' maildesk 2) Manager (Fin- Estt.)

3) DGM (HR), Piping Centre, Chennai, 4) DGM (HR), PPPU, Thirumayam.

(M Melvin Bennet Roy)

DGM (HR — EE & CE)
 Rules pertaining to Perks and Allowances in `Cafeteria'-

General Conditions

1. Consequent upon introduction of the Perks and Allowances under 'Cafeteria' effective from
26th Nov., 2008, Rules relating to the existing Perks /Allowances have been reviewed and
the Rules pertaining to new Perks/Allowances introduced in the 'Cafeteria' have been
formulated and placed below.

2. The employees are required to exercise their option for Perks/Allowances under 'Cafeteria'
before 15th April of every financial year as per the prescribed percentage of Basic Pay. This
option can be reviewed during the financial year, only in case of promotion / cadre change
or occurrence of an event which makes a Perk/Allowance admissible/inadmissible. The
admissibility of Perks / Allowances covered under the relevant 'Cafeteria' for respective
categories of employees will be checked/verified by HR Department. The prescribed
percentage of Basic Pay for various perks will be issued separately from time to time.

3. The amount paid towards the Perks and Allowances will be taxable in the hands of the
employee as per IT Rules applicable to Perks / Allowances & TDS will be deducted by the
concerned Finance Department as per Rules.

4. For claiming Income Tax benefits on availing Perks and Allowances which qualify for income
tax rebate, the requisite documents as prescribed in the respective policies shall be
submitted by the employee to HR/Finance Department wherever specified. Necessary
vouchers for the expenditure incurred towards these perks should be maintained by the
individuals for submission to IT authorities, as & when required by them.

5. While the Perks & Allowances under "Cafeteria", are effective from 26th Nov., 2008, the
enclosed Rules are applicable w.e.f. 01/04/2010.

6. A separate cafeteria shall be notified for employees posted at sites.

RULES
(1) Washing Allowance

(i) Washing allowance, limited to the prescribed percentage of Basic Pay is admissible
to all regular employees as well as STs & ETs, who are provided with uniforms /
protective clothing.
(ii) The payment of washing allowance will be subject to the condition that the uniform
/ protective clothing is worn by the employee while on duty during the period for
which the allowance is claimed.
(iii) A declaration to the effect of having incurred such expenses will be required to be
submitted to Finance Department by the employee at the end of the financial year
in the prescribed format.

pg. 1
 Declaration form for expenditure Incurred as Washing Allowance

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of (Rupees ) per month

towards washing of uniform / protective clothing for months during the financial year
which is % of my Basic pay for the corresponding period.

Signature of employee

(2) Uniform Maintenance Reimbursement

(i) Uniform Maintenance reimbursement, limited to the prescribed percentage of Basic

Pay is admissible to all regular employees as well as STs & ETs who are provided
with uniforms / protective clothing.
(ii) The reimbursement towards Uniform Maintenance will be subject to the condition
that the uniform / protective clothing is worn by the employee while on duty during
the period for which the allowance is claimed.
(iii) A declaration to the effect of having incurred such expenses will be required to be
submitted to Finance Department by the employee at the end of the financial year
in the prescribed format.

pg. 2
 Declaration form for expenditure Incurred as Uniform Maintenance

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of (Rupees ) per month

towards maintenance of uniform / protective clothing for months during the financial year
which is % of my Basic pay for the corresponding period.

Signature of employee

(3) Reimbursement of Conveyance Expenditure.

1. Reimbursement of conveyance expenditure, limited to the prescribed percentage of

Basic Pay, will be admissible to regular employees, who own and maintain a vehicle, and
use the same on journeys undertaken for official purpose(s).

2. Condition of Eligibility:

(I) Reimbursement shall be allowed in respect of one vehicle only, provided it is

owned and registered in the name of the eligible employee. A regular employee
becomes entitled for reimbursement from the date of purchase and its use for
official duties. Employee is required to submit the copy of registration and
insurance cover of the vehicle to the HR Department at the time of submission of
the Cafeteria form.

(ii) An employee who is availing reimbursement of Conveyance expenditure shall use

his / her own conveyance for official journey within the limits of the city / town /
Headquarters / Company's township where posted. For such local journeys, local
conveyance charges as admissible under T.A. Rules will be paid.

(iii) An employee who claims reimbursement under these Rules will not be entitled to
avail Company's staff car facilities except in exceptional circumstances. However,

pg. 3
 local travel while proceeding on tour, journey to / from railway station/ airport / bus
stand at the commencement of tour and on return from tour shall not attract the
provision of this Rule.

(iv) Similarly, an employee who is availing reimbursement of Conveyance expenditure

shall use his/her own conveyance for official journey performed on
holidays/Sundays/weekly offs. For such local journeys, local conveyance charges
as admissible under T.A. Rules will be paid.

(v) Employee who is provided free / subsidized transport facility at the place of work
or in receipt of transport assistance charges as admissible will not be eligible for
reimbursement of conveyance expenditure under these Rules.

(vi) Employees posted at project sites will not be eligible for reimbursement of
conveyance expenditure under these rules.

(vii) Orthopedically / Visually Challenged and Deaf & Dumb employees are permitted
to opt for conveyance reimbursement to the extent of double the maximum %age
of basic pay, permissible in case of normal employees within the prescribed %age.

3. The employee entitled to reimbursement under these Rules will, if he / she is no longer
in possession of vehicle through loss, sale, theft, etc., shall immediately report the matter
in writing to the 1-1R Department, within 30 days of such an occurrence, with a copy to the
Finance Department.

4. A declaration to the effect of having incurred such expenses will be required to be

submitted to Finance Department by the employee at the end of the financial year in the
prescribed format.

Declaration form for expenditure Incurred on Conveyance

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred Rs (Rupees ) per

Month, as running expenditure (of my Car upto 1.6 CC / more than 1.6 CC) / Scooter /Motor Cycle
/ Moped (tick whichever is applicable), for Months! since (dd/mm/yy) during
the financial year which is % of my Basic pay for the corresponding period.

Signature of employee

(4) Vehicle Maintenance Reimbursement

1. Regular employee are eligible for reimbursement of the cost of spares and amount
spent on repairs of the vehicle, limited to the prescribed percentage of Basic Pay.

2. The amount on this account is admissible subject to the condition that employee owns
a vehicle and is availing conveyance reimbursement for the same.

3. The employee entitled to reimbursement under these Rules will, if he / she is no longer
in possession of vehicle through loss, sale, theft, etc., immediately report the matter to
the HR Department, within 30 days of such an occurrence, with a copy to the Finance
Department.

4. Employees posted at project sites will not be eligible for reimbursement of vehicle
maintenance under these rules.

(5) Reimbursement for Hiring Driver

(i) Eligible employees who own a car and are availing conveyance reimbursement
are eligible to claim reimbursement for hiring a driver limited to the prescribed
percentage of Basic Pay. However, a declaration of having hired the services of
a driver is required to be submitted by the employee in the prescribed format at
the end of the financial year to the Finance Department that he / she has actually
incurred the expenditure.

(ii) The employee entitled to reimbursement under these Rules will, if he / she is no
longer in possession of vehicle through loss, sale, theft, etc., immediately report
the matter to the HR Department, within 30 days of such an occurrence, with a
copy to the Finance Department.

(iii) Employees posted at project sites will not be eligible for reimbursement for hiring
of driver under these rules.

Pg.
 Declaration Form regarding Hiring of Driver

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have hired Shri / Smt. as my driver and have paid Rs.
(Rupees ) per month towards utilizing his / her services for
months during the financial year which is % of my basic
pay for the corresponding period.

Signature of employee.

(6) Transport Assistance

Employees, who are not in receipt of reimbursement of conveyance expenditure/company

vehicle, are eligible to claim transport assistance, limited to the prescribed percentage of
Basic Pay. Employees posted at project sites will not be eligible for reimbursement of
conveyance expenditure under these rules.

(7) Fitness Allowance

In order to encourage regular employees to maintain their health & fitness, Fitness Allowance
limited to the prescribed percentage of Basic Pay is admissible to them for using facilities
and equipments that may be required for this purpose.

(8) Reimbursement of Club Membership

For furtherance of official duties / business interest, Club Membership is admissible to eligible
employees limited to the prescribed percentage of Basic Pay. However a declaration that the
employee has actually incurred the expenditure is required to be submitted by him/her in the
prescribed format at the end of the financial year to the Finance Department

fig
 Declaration form for Club Membership

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees )per

month towards membership of club for months during the financial
year which is % of my basic pay for the corresponding period

Signature of employee

(9) Reimbursement of hiring Domestic Helpers

Expenditure incurred towards hiring domestic Helper/s is reimbursable to eligible

employees, limited to the prescribed percentage of Basic Pay.

Declaration form for reimbursement of hiring Domestic Helpers

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees )per

month towards hiring of domestic helpers for months during the financial
year which is % of my basic pay for the corresponding period

Signature of employee
 (10) Reimbursement of Professional Development Expenditure

With a view to encourage employees for pursuing professional pursuits to enable them to keep
pace with the fast changing Technology / environment, reimbursement of professional
development expenditure is allowed to employees under the following Heads limited to the
prescribed percentage of Basic Pay. A declaration to the effect of having incurred such expenses
will be required to be submitted to Finance Department by the employee at the end of the financial
year in the prescribed format.

Declaration form for Expenditure Incurred towards Professional Development

Name of Employee Staff No

Designation Grade

Department Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees ) per

month towards Professional Development (Tick whichever is applicable in the items listed
be low)for months during the financial year which is % of
my basic pay for the corresponding period.

1. Reimbursement of Expenditure towards Newspapers and Magazines

2, Reimbursement of Expenditure towards Newspapers, Magazines and

Internet Charges

3. Reimbursement of Expenditure towards Newspapers, Internet Charges etc.

4. Reimbursement of Professional Development Expenditure (including

Reimbursement towards Newspapers, Technical Journals, Magazines,
Books, Internet Charges etc.)

5. Reimbursement of Professional Development Expenditure (including

Reimbursement towards Newspaper, Technical Journals, Magazines, Books,
etc.)

6. Reimbursement of Internet Charges & Membership of Professional Bodies

both National & International

Signature of employee
(11) Reimbursement of Children Education fee

(i) To provide assistance towards education of the wards of regular employees

reimbursement of expenditure incurred on Tuition Fees is admissible to eligible regular
employees, subject to a maximum of two children, for pursuing education upto graduation
/ professional courses limited to the entitled percentage of Basic Pay.

(ii) In cases, where one of the children is pursuing a course upto graduation and the other, a
professional course then the combined ceiling limit of reimbursement for both the children
may be permitted at the rate which is higher of the two percentages as prescribed in the
Cafeteria.

(iii) For the purpose of reimbursement, all Post-Graduate courses and above will be treated
at par with professional courses.

(iv) The name and age of the children, along with the educational course being pursued will
be verified by HR Department subject to furnishing of necessary documents by the
concerned employee in support of his /her children pursuing such course.

(12) Hostel Charges

(i) To provide for boarding and lodging charges for educational assistance towards of regular
employees, pursuing educational courses reimbursement of hostel charges including
unattached hostels is admissible to regular employees, subject to a maximum of two
children, limited to the prescribed percentage of Basic Pay.

(ii) The name and age of the children, along with the educational course being pursued will
be verified by HR Department subject to furnishing of necessary documents by the
concerned employee in support of his /her children pursuing such course.

(13) Reimbursement of House Up-keep expenditure

With a view to enable eligible employees to up-keep and maintain their houses reimbursement of
expenditure towards house up-keep, is admissible limited to the entitled percentage of Basic Pay.

Declaration form for reimbursement of House Up-keep expenditure

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

 Certified that I have incurred an expenditure of Rs (Rupees ) per
month towards reimbursement of House Up-keep expenditure for months during the
financial year which is % of my basic pay for the corresponding period

Signature of employee

(14) Reimbursement of Electricity Charges

Reimbursement of electricity charges is admissible to eligible employees, limited to the entitled

percentage of Basic Pay.

Declaration form for reimbursement of Electricity Charges

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees ) per

month towards reimbursement of Electricity Charges for months during the financial
year which is % of my basic pay for the corresponding period

Signature of employee

(15) Reimbursement for hiring Gardener

Reimbursement of expense towards hiring the services of a gardener is admissible to eligible

employees, limited to the entitled percentage of Basic Pay.

Declaration form for reimbursement for hiring Gardner

Name of Employee

Staff No

Designation

Grade

Department

pg. 10
 Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees ) per

month towards reimbursement for hiring Gardner for months during the financial
year which is % of my basic pay for the corresponding period

Signature of employee

(16) Reimbursement for engagement of helper for assistance in the performance of

official work at residence (for E2 and above):

Reimbursement of expenses towards engagement of helper for assistance in the performance of

official work at residence is admissible to eligible employees, limited to the entitled percentage of
Basic Pay.

Declaration form for reimbursement for engagement of Helper

Name of Employee

Staff No

Designation

Grade

Department

Present Basic Pay

Certified that I have incurred an expenditure of Rs (Rupees ............. .....„) per

month towards reimbursement for hiring Gardner for months during the financial
year which is % of my basic pay for the corresponding period

Signature of employee

(17) Leave Travel Concession Rules

1. Definitions:

1.1.1 'Employee' means a person employed in the regular establishment of the Company, who has
completed one year of continuous service in the Company on the date of commencement of
outward journey. The training period as Departmental Trainee / Trainee Officer (ET—Engineer
trainee /Executive trainee) / Supervisor Trainee will count as service for the purpose.
 However, the eligibility for the purpose of availing LTC by the regular employees other than
Departmental Trainees/Trainee Officer (ET—Engineer trainee /Executive trainee)/Supervisor
Trainee will be reckoned w.e.f. the date of joining, subject to the completion of one year of
continuous service in the Company as elaborated above.

1.1.1 Employees who joined this Company after 15.6.1987, after having served in the Railways and
are availing the facility of Railway passes are not entitled to the Company's LTC facility in
respect of himself/herself and such members of the family who are covered under the Railway
pass facility. LTC is admissible only to the members of family not covered under the pass
facility. Employee who joined this Company on or before 15.6.1987 after having served in
Railways are entitled to LTC for self and family.

1.1.2 Employees whose spouses are employed in any scheduled Airlines /Indian Railways etc. and
are availing free/concessional passes from such organizations are not entitled to LTC facility
of the Company.

1.1.3 Employees whose spouses are employed in GovernmentiPSUs /Quasi Govt. bodies, and
are entitled to the facility of LTC / Leave Travel Assistance etc. can avail tax exemption for
the same family members from one source only.

1.2. 'Family' means spouse of an employee, two dependent children (including legally
adopted children) and parents of the employee wholly dependent on the employee.
However, restriction of two dependent children will not be applicable in case of
employees who joined the Company before 10th April 2003.

1.2.1 'Dependency of Children' will be only till the age of 25 years. However, those who take-up
employment and are earning more than Rs.1500/- p.m,, or get married, will cease to be
dependent on the employee, irrespective of their age.

The exemption under IT Act, however, will not be available to more than two surviving
children, born after 01.10.1998. This restriction shall not apply in respect of children born
before 01.10.1998 and also in case of multiple births after one child.

1.2.2 Children above 25 years of age, if pursuing studies on full time basis will be treated as
dependents. Those in receipt of scholarship or stipend during their Internship / Articleship /
Training as part of a professional course will continue to be dependent on the employee,
irrespective of the amount of stipend. Those who attain the age of 25 years and take up
employment, which renders them ineligible for LTC, will not be re-admitted to the LTC scheme,
even if they once again fulfill all the dependency criteria at a later date, on account of resuming
higher studies and giving up employment.

1.2.3 Daughters above 25 years of age if unmarried and otherwise dependent on the employee can
be treated as dependent.

pg. 1 2
1.2.4 Physically or mentally challenged children may be treated as dependent irrespective of their
age subject to a certificate to that effect by MS / CMS / AMA of BHEL Hospital and will
continue to be eligible for LTC benefits under the rules as long as they fulfill the dependency
criteria under the rules.

1.2.5 'Dependency of Parents' is subject to the condition that their monthly income of both parents
taken together from all sources does not exceed Z. 1500/- p.m. There is also no requirement
to the effect that the spouse or dependent family members of the employee shall be residing
with the employee for being eligible for the LTC exemption.

1.2.6 Step-parents are not considered as dependents .

1.2.7 Dependent parents who are enjoying the facility of Railway passes due to their previous
service in Railways are not entitled to LTC facility of the Company.

1.2.8 In cases where the spouse is also employed in the Company, LTC facility is admissible to the
dependent parents of either the husband or the wife based on the option exercised.

1.2.9 The employee can avail LTC from Headquarter only. However, spouse & dependent family
member of the employee who may be staying or studying at places other than Headquarters
of the employee may avail LTC from these places.

1.3 Headquarters means the normal place of duty of the employee at the time of outward journey.

1.4 Each family member shall be treated as separate unit for LTC purposes

2. Nature and Extent of Concession

2.1 Payment of LTC will be made every month limited to the prescribed percentage of Basic Pay
as mentioned in the Cafeteria based on the option exercised by the employee at the beginning
of the financial year.

2.2 The LTC amount will be taxable in the hands of the employee as per IT Rules applicable to
perks / allowances from time to time & TDS will be effected by the concerned
Finance Department as per Rules.

2.3 Carry — Over Concession: If an employee has not availed leave travel concession or
assistance during any of the specified four-year block periods on one of the two permitted
occasions (or on both occasions), exemption can be claimed in the first calendar year of the
next block (but in respect of only one journey). However, the exemption will be with reference
to the amount of perk payable during that financial year.

3. Entitlement for Distance, Mode and Class of travel

3.1 Employees may travel by any class and mode of transport from Head Quarters to any place
in India / Abroad. However, the income tax exemption will be restricted for travel within India,
as per applicable IT Rules.

3,2 The quantum of IT exemption will be limited to the maximum limits provided in IT Rules,
depending on the mode of transport used by the employee or his/her family members.
4. Proof of Journey

Air Boarding Pass & ticket showing details of journey

Train Photocopy of Ticket
Car Whichever is relevant
Car registration No. and name of owner
Petrol/Diesel receipts
Toll/Bridge Tax receipts
Hotel/Guest House bills

Public Bus/ Taxi Tickets/Receipts/ Taxi registration number

Chartered Bus Tickets/Receipts
Letter /Certificate issued by State Road
Transport Corporations/ ITDC/Other Central/State
Government Transport Agencies indicating
- Number of passengers travelled
- Total charges paid for hiring the bus, charges per seat
excluding incidentals towards food, halting, lodging charges
etc

Details common to all Place of commencement of journey

journeys Place(s) of visit with dates
Details of those availing
Declaration of non-availment of tax benefit for the
same family members from other Organizations etc.

4.1 For availing tax exemption as per IT Rules, employees are required to submit the proof of
journey performed along with the claim form (Annexure — IX) sufficiently in advance.

6. General Conditions

5.1 The basic condition for availing of the exemption is that the employee must have taken leave
for the purpose of travel. An employee may avail LTC during leave of any duration and of any
kind including Casual Leave. This will include special leave granted for sports meets as also
prior sanctioned leave without pay but not unauthorized absence. However, employee should
not be on Commuted Medical Leave on the date of commencement of outward as well as
return journey. Further being on official tour or undertaking leave travel on Sundays or other
closed holidays does not satisfy the requirement of "proceeding on leave".

pp,. 11
 LTC blocks for the purpose of Income Tax exemption will be 2010-13 onwards (Calendar
Years).

Form for Claiming Leave Travel Concession (LTC)

Name of Employee Staff No

Designation Grade

Department Present Basic Pay

Date of joining BHEL Phone No

Block last availed Block being availed

Headquarters currently (1st / 2nd journey)

Nature of Leave Duration of Leave: From To

Details of claim:

Certified that I / my following family members have travelled on LTC and performed the journey
as per details given below:

Class
Mode
& Seat Fare
Date Station of
/ Berth (Rs.)
SI. DOB Relationship of travel
Name No.
No Travel
From To

Onward Journey

Return Journey

pg. 15
 Total

Certified that:

1. I am availing LTC for the 1St / 2nd journey for the 4 year Block starting from 2040-201-3

2. The journey for which the claim is made has actually being performed by the mode and
class of accommodation for which the claim is preferred (Requisite documents as proof of
journeys attached).

3. My spouse is / is not employed in BHEL / Central I State Govt. I Other PSU / Autonomous
Body / Semi Govt. Org. / Nationalized Bank and is / is not claiming tax benefits for LTC for
the block now applied.

4, My parents: (a) are wholly dependent on me (b) their income from all sources does not
exceed Rs. 1500/- p.m. and they are not entitled to complimentary Railway /Airlines pass.

5. My children for whom LTC claim is being applied for, fulfil the 'dependency' criteria with
regards to age, marital status, occupation and income as applicable.

Signature of Employee

Entitlement for Block-year ,& details of family members verified from H.R.
Department record

No
Date: Signature — Authorised Officer , HR Estt.

Finance Establishment

pg. 16
 Clarifications on taxability of Leave Travel Concession

Query 1: "What is the meaning of the word 'leave' as used u/s.10(5) of the Income Tax Act, 1961?
Whether the employee who leaves the station on official tour to any destination in India falls within
the ambit of leave or permission taken for performing such journey?"

Clarification:

The basic condition for availing of the exemption is that the employee must have taken leave for
the purpose of travel. This is clear from Section 10(5)(a) which requires the employee to proceed
on leave to any place in India. An employee may have taken any kind of leave including casual
leave or special casual leave. In the case of the BHEL, LTC can be availed of by an employee on
Saturday provided it is a working day and he takes leave for that day.

An employee who leaves the headquarters on official tour to any destination in India cannot
obviously be taken to have proceeded on leave in connection with the leave travel. The Sub-
Section requires that the employee should proceed on leave — earned leave, casual leave or
special casual leave or any other kind of leave. Being on official tour or undertaking leave travel
on Sundays or other closed holidays does not satisfy the requirement of "proceeding on leave".
In the case of BHEL, if Saturdays are working days, an employee can take leave for that day to
proceed on LTC travel.

Query 2: (i) "Whether in the light of the recent CBDT Circular dated 02.12.2015, LTC exemption
for entire journey or dependent family members can be granted to employees, who have
performed only part of the journey with concerned employee during the LTC period and such
employees are as such on leave for only part of the duration of LTC period availed by rest of the
family members?"

(ii) "Whether an employee who leaves the station on official tour within India and is also
accompanied by his/her family while on official tour, in such cases whether the concerned
employee can be granted LTC exemption towards travel cost of his/her family only (i.e., without
considering travel cost of an employee) as the travel cost of an employee has been borne by the
company in case of official tour?"

(iii) Further, in case employees who are allowed to retain family at places other than employee's
place of posting, whether LTC exemption can be granted for journeys performed by dependent
family members without being accompanied by the employee?"

Clarification i) If supposing the employee is asked to go to Srinagar from Mumbai on official tour
and his family either accompanies or joins him at Srinagar at the beginning of his tour, the
employee will not be eligible for any LTC exemption for himself for his travel to Srinagar from
Mumbai. However, there is no bar on his family members availing the LTC exemption and they
will be eligible for the same from their place of residence to destinatiOn.

Clarification ii) & Hi) Yes. Each family member is required to be treated, for LTC purposes, as a
separate unit and any restrictions placed upon this will be against the spirit and intent behind the
grant of the exemption.

17
There is also no requirement to the effect that the spouse or dependent family members of the
employee shall be residing with the employee for being eligible for the LTC exemption. There can
be, for example, a situation where the employee is working in Delhi and his family is permitted to
remain in Chennai. The employee may plan to avail of the LTC exemption both for himself and
for his dependent family members for going to Srinagar, It may also happen that the employee
proceeds on official tour to Mumbai for a week and thereafter joins his family at Srinagar, say, for
a week, taking leave to do so. In this case, the LTC amount allowable to him will be limited to his
travel from Delhi, his official headquarters, to Srinagar. In the case of his dependent family, the
fare will be restricted to that from Chennai to Srinagar (to & fro). If one of the children of the
employee is studying in Hyderabad, he will be eligible for LTC fare from Hyderabad to Srinagar
and back.

In the aforesaid example if supposing the employee is asked to go to Srinagar from Mumbai on
official tour and his family joins him at Srinagar at the beginning of his tour, the employee will not
be eligible for any LTC exemption for his travel to Srinagar because he is on official tour and not
on leave. However, there is no bar on his family members availing of the LTC exemption.

As regards the employees who are permitted to retain the family at places other than the place of
posting of the employees, the LTC exemption can be granted for journeys performed by the
spouse or other dependent family members without being accompanied by the employees. In
such case, Section 10(5) of the Act read with Rule 2B of the Rules will apply. The proviso to
section 10(5) limits the amount exempt to the amount of expenses "actually incurred for the
purposes of such travel". There is no condition prescribed by the section that the amount of
expenses on leave travel incurred by the dependents of the employee shall be limited to the lesser
of a). the fare by the entitled class or mode from the place of posting of the employee to the leave
travel destination and b). the fare by the entitled class or mode from the place of stay of the
dependents to the leave travel destination.

Therefore, if an employee is posted in Delhi and his family is permitted to be retained in Chennai,
the employee may think of availing LTC both for himself and his family members in respect of
their travel to Srinagar. As BHEL Rules permit, he may claim the travel fare by the entitled mode
or class for his family from Chennai to Srinagar and back. The quantum of exemption, with which
alone Income Tax Act and the rules are concerned, will be limited to the actual fare and nothing
more. This only implies that the employee of the company and his family members have to actually
perform the journey and incur the expenses in order to claim exemption.

Query 3: "Whether the company can allow LTC exemption to employees considering each
dependent family member as an independent unit?"

Clarification: There is no condition that the family members should travel, for the purpose of
availing LTC, along with the employee. Each of the family members can travel at different times
during the eligible period and can also travel to different destinations for availing of the LTC. There
is no prohibition on this. Therefore, LTC exemption can be allowed to employees considering the
spouse and each dependent family members as a separate and independent unit.

pg. 1 8
Query 4: (a) "Against the two journeys allowed during the block period of four years, if an
employee is not drawing any salary for the first two years of the block period (of four years), and
hence there is no amount drawn towards travel exemption/assistance/allowance in the first two
years, then whether the income-tax exemption for two journeys can be allowed during the last
two years of the block against the amount drawn as LTC?"

(b) "Whether LTC exemption can be given by the DDO in respect of two journeys performed by
the individual in the same calendar year or not?"

(c) "Whether LTC exemption can be given by the DDO in respect of two journeys performed by
the individual in the same financial year or not?

Clarification: a). Since the employee did not draw any salary in the first two years of the block
period and hence the question of allowing him LTC exemption did not arise in those years, he can
perform two journeys in the last two years of the block period and claim exemption in respect of
the LTC received in those two years.

b). Whether LTC exemption can be claimed in respect of two journeys performed by the individual
in the same calendar year, the answer is in the negative.

c). Where the two journeys are performed in the same financial year in such a manner that the
journeys fall in two calendar years (first journey during the months of April to December and the
second journey during the months of January to March of the succeeding calendar year), the LTC
exemption can be claimed because the journeys fall in two calendar years.

Query 5: "If the amount spent by the employee is higher than the maximum amount admissible
as per company policy/rule, then whether the excess amount is taxable in the hands of concerned
employee? For example, if an employee actually incurs x.1.50 lakhs on fare but his/her LTC
entitlement as per the Company's policy/rule is lakh only, then whether the excess amount
will be taxable or not?"

Clarification: if the amount spent by the employee is higher than his entitlement to LTC from the
Company/ Cafeteria, as given in the example, then there is no question of being taxed on the
difference. The excess will merely be expenditure by the employee which was not, under the rules
relating to LTC, reimbursed to him by the employer. However, in a reverse case — that is, where
the fare actually incurred is less than the amount of LTC actually received by the employee under
the LTC rules, the excess will be taxable in the hands of the employee in the year in which it is
received.

Query 6: "If any employee who opts for the LTC/LTA as one of the items as per policy/rules of
the company, but does not claim any exemption under the Income Tax Act during the same
period, then whether the amount paid and taxed during the previous financial year can be clubbed
or considered in a subsequent year falling in the relevant block period in which LTC is availed by
the concerned employee?"
Clarification: The query is about an employee of the Company who opts for LTC in a year but
does not claim any exemption from Income Tax for that year. It appears that in such a case, the
amount paid and taxed during the particular year cannot be clubbed or considered in a
subsequent year falling in the relevant block period in which the LTC is availed of by him. The
question of claiming exemption is different from the case of an employee who has not received
the LTC at all.

Query 7: "What is the meaning of 'shortest route' in case of multiple locations are visited during
LTC? Whether it is mandatory to visit only one place during LTC to apply the rule of 'shortest
route'?"

Clarification: It is not mandatory for the employee to restrict his visit to the destination of leave
travel declared. It is open to him to visit other places too en route to the destination. However, the
fare, for purposes of LTC will be calculated on the basis of the shortest route to the destination
from his headquarters, ignoring the other places visited by the employee while reaching the
destination. This is the basis on which Government grants LTC to its employees. Rule 2B(i) & (ii)
also states that the amount actually incurred on the performance of the travel will be an amount
not exceeding the air-fare or the rail-fare by the shortest route to the place of destination. To give
an example, suppose an employee, who is posted in Delhi, has declared his destination for
purposes of leave travel as Kanyakumari. But while reaching Kanyakumari, he may travel from
Delhi to Kolkata and Madras during the onward journey and while returning, he may travel from
Kanyakumari to Mumbai and return to Delhi. But for purposes of granting exemption under
Section 10(5) read with Rule 2B, the fare will be calculated between Delhi and Kanyakumari by
the shortest route. If he is entitled to travel by Air he will be eligible for the exemption restricted to
the air-fare between Delhi & Kanyakumari and if he is entitled to travel by Rail, he will be entitled
to claim exemption only in respect of fares by trains running between Delhi and Kanyakumari.

(18) Cycle Allowance

Cycle Allowance limited to the prescribed percentage of basic pay is admissible to eligible
employees who own and maintain cycles and use the same for discharge official duties. Cycle
Allowance will be admissible to such employees who are not availing Transport assistance or
reimbursement of Conveyance expenditure or subsidised transport facility provided by the
Company.

(19) Other Allowance

Allowance(s) not covered in the cafeteria or specific to a Unit will be admissible limited to the
percentage of Basic pay applicable to the concerned employee opting for other Allowances.

(20) Housing Loan Recovery Reimbursement

BHEL Housing Loan Recovery Reimbursement (HLRR) shall be admissible on the following terms
and conditions:

pg. 20
 1 Eligibility

The reimbursement of this perk under Cafeteria will be made to all eligible employees of the
company from approved landing agencies, limited to prescribed percentage under cafeteria
as intimated from time to time.

2 Purpose

2.1 The reimbursement will be admissible on a housing loan where employee is the sole
borrower or a co-borrower with spouse.

2.1.1 In case the spouse of the employee is availing this reimbursement from any other PSU
/Govt./Semi Govt. Source, on a housing loan held jointly, the employee will be eligible for
availing this reimbursement only to the extent of the EMI apportioned to him / her.

2.1.2 Where the spouse of the employee is the co-borrower, and not covered by the clause
2.1.1, the qualifying amount for this payment of the entitled percentage will be taken as if the
full loan has been sanctioned to the employee.

2.2 This payment will be sanctioned for a dwelling unit

(a) owned by the employee OR

(b) in joint name with spouse

2.3 This payment will be admissible on a housing loan at any place in India for:

a) construction of new house OR

b) acquisition of ready built house / flat (new or lived-in) OR

c) acquisition of land & construction of house OR

d) upgradation of the accommodation which includes enlargement, extension, repair,

improvement, renovation, modification and alteration of an existing house.

3 Entitlement and quantum

3.1 Employee are entitled for this reimbursement at the prescribed percentage under
cafeteria. However, the percentage opted by the employee should not exceed the EMI of the
loan drawn.

4 Procedures

4.1 Procedures to be followed by the employee

4.1.1 The employee may avail this reimbursement by selecting this option in the format at
the beginning of the financial year and / or at the time of occurrence of an event
necessitating change in options as per the Rules pertaining to Perks and Allowances
in 'Cafeteria'.

pg. 2 I
 4.1.2 Each disbursement of the sanctioned loan will have to be intimated to the company
by the employee.
4.1.3 This reimbursement will be paid after actual verification of payment receipts from time
to time except in case where EMI is being paid through salary.

4.2 Documents to be submitted to HR department for scrutiny

1. Copy of loan Sanction letter.

2. Copy of loan disbursement letter. In case of multiple disbursements, each

disbursement is to be intimated / copy given

4.3 Employees opting for the perk should declare whether HBA or HLIS from the Company/any
other PSU /Govt./Semi Govt. Source or loan has been availed.

5. Deduction and remittance of instalments of housing loans

5.1 The instalments towards repayment of housing loan may be recovered from the salaries
of the employee and remitted to the lending agency based on the authorization from the
employees in the requisite format subject to the following conditions:
5.2 This facility will be limited only in respect of loans taken from any of the approved
lending agency in this scheme.
5.3 BHEL will neither guarantee nor be a surety for this loan and will not accept any financial
liability whatsoever in this regard.
5.4 In the event of non-deduction of EMI from the salary due to various reasons including net
salary being inadequate, the lending agency will deal directly with the borrower employee.
5.5 No part recovery will be made if the salary does not permit full recovery.
5.6 It is to ensured that this commitment does not violate any statutory provisions and also
does not make BHEL a party to any dispute arising out of default or non-repayment of
loan.

5.7 In order to ensure that the loan is existing and the EMI is being remitted without default,
the employee who are directly remitting the EMI of the loan to the lending agency are
required to furnish copy of the receipt of payment of EMI from the lending agency I
deductions from their bank account.

5.8 Any penal interest due to default in repayment of loan will not be taken into account for
this reimbursement.

5.9 In case the EMI of employee gets reduced due to any lump sum repayment of loan
resulting in amount of monthly reimbursement becoming higher than the EMI then the
same will be restricted to the amount of EMI. The employees will be required to intimate
the company in event of such lump sum repayment and consequent revision of EMI.

5.10 The loan repayment period may extend beyond superannuation of the employee. If
agreed to by the lending agency, depending upon the post retirement repaying capacity
of the employee. However, reconciliation etc. with the bank in this regard will be the
responsibility of the concerned employee. The lending agency may be given the

pg. 2 2
 commitment for adjusting the outstanding loan amount of the borrower employee from the
terminal benefits in the events of cessation of employment, provided it is not violating any
law and subject to the condition that the residual amount is available after making
adjustment of other outstanding dues for which the employee will be required to give
irrevocable authorisation to the company with the approval of Competent Authority. No
commitment beyond what is stated above will be given to any lending agency.

6 Approved list of lending agencies

The employee can directly avail housing loan from

6.1 Any housing financing agency and Banks operating under license from RBI/NHB.
6.2 BHEL Thrift and Credit Cooperative Society Ltd. Bhopal and Bharat Heavy Electricals
Employee Cooperative Credit Society Ltd. Bangalore.

7 Membership to Employee Housing Loan Group Insurance Scheme (HLGIS)

All employees who have a housing loan, whether availing this payment under cafeteria or not,
can become member of BHEL Housing Loan Group Insurance Scheme (HLGIS). In their own
interest, employees are advised to join the scheme from the date of disbursement of first
instalment of the loan.

8. General terms and Conditions

8.1 All the terms and conditions on perks and allowances under cafeteria modified from time
to time will be applicable.

8.2 In the event of employee opting for this perk under cafeteria ceases to have a housing
loan during the financial year, he /she will not be eligible for the prescribed percentage of
this perk and will allowed to given a revised option under the list of perks.
8.3 As and when an employee is transferred from one unit to another during the financial year,
the option given by the employee will continue till the same is revised as per the rules
under cafeteria. In the event of EMI being deducted from the salary, necessary details will
be furnished along with the last pay certificate of the employee.

(21). Vehicle Loan Recovery Reimbursement

BHEL Vehicle Loan Recovery Reimbursement under cafeteria shall be admissible as per
following terms & conditions:

1 Eligibility

1.1 All regular employees of the company who opt for this perk as per the prescribed
percentage for this reimbursement under Cafeteria as intimated from time to time.
1.2 The percentage opted by the employee for this reimbursement will not exceed the EMI of
the loan drawn.

2. Purpose

pg. ::3
This reimbursement will be sanctioned on a vehicle loan in the name of the employee for purchase
of vehicle in his/her name.

3 Approved Lending Agency

Any financing agency operating under license from RBI or any registered financing agency in
the cooperative sector.

4 Procedures

4.1 The employee may avail the benefits by selecting this option in the format at the beginning
of the financial year.

4.2 This reimbursement is payable during the Financial Year till the repayment of loan or
cessation of employment with BHEL or sale/ theft of vehicle for which this perk is being availed
by the employee , whichever is earlier . The employee is required to revise his / her list of
perks and allowances for all conditions stipulated in the Rules pertaining to Perks and
Allowances in 'Cafeteria' and in case of sale / theft of the vehicle during the Financial Year,
resulting in foreclosure of the loan and with new loan not being taken.

4.3 Documents to be submitted to HR Department for Scrutiny

1) Copy of loan sanction letter from any of the approved financing agencies

2) Copy of receipt of the amount paid to the dealer / vehicle invoice

3) Copy of Registration certificate of the vehicle purchased

4) Copy of Insurance certificate

4.4 Employees opting for the perk should declare whether vehicle loan or VLIS from the
Company/any other PSU /Govt./Semi Govt. Source or loan has been availed

5 Remittance of instalments of loan

5.1 Employee will be free to remit the loan directly to the financial agency. However, if they
authorize, the Company will deduct and remit the instalment towards the repayment of such loan
under the following conditions:

1) In respect of loans taken from approved lending agency in this scheme.

2) In the event of non- recovery due to various reasons including net salary being inadequate, the
lending agency will deal directly with the borrower.

3) No part recovery of EMI will be made if the salary doesn't permit full recovery.

4) The commitment does not violate any statutory provision and does not make BHEL a part to
any dispute arising out of default or non-repayment of loan.

Pg. 21
5) Such remittance does not imply that the company will guarantee or be a surety for the loan.
BHEL will not accept any financial liability in this regard.

5.2 Whenever sufficient amount for recovering the EMI is not available in the salary of the
employee then no remittance will be made to the lending agency.

5.3 In order to ensure that the loan is existing and the EMI is being remitted without default, the
employee who are directly remitting the EMI of the loan to the lending agency are required to
furnish copy of the receipt of payment of EMI from the lending agency / deductions from their
bank account.

5.4 Any penal interest due to default in repayment of loan will not be taken into account for this
reimbursement.

5.5 In case the EMI of employee gets reduced due to any lump sum repayment of loan resulting
in amount of monthly reimbursement becoming higher than the EMI then the same will be
restricted to the amount of EMI. The employees will be required to intimate the company in event
of such lump sum repayment and consequent revision of EMI.

5.6 The loan repayment period may extend beyond superannuation of the employee. If agreed to
by the lending agency, depending upon the post retirement repaying capacity of the employee.
However, reconciliation etc. with the bank in this regard will be the responsibility of the concerned
employee. The lending agency may be given the commitment for adjusting the outstanding loan
amount of the borrower employee from the terminal benefits in the events of cessation of
employment, provided it is not violating any law and subject to the condition that the residual
amount is available after making adjustment of other outstanding dues to the Company for which
the employee will be required to give irrevocable authorisation to the Company with the approval
of Competent Authority. No commitment beyond what is stated above will be given to any lending
agency.

6 Memberships to BHEL Employees Vehicle Loan Group Insurance Scheme (VLGIS)

All employees who have a housing loan, whether availing this payment under cafeteria or not,
can become member of BHEL Vehicle Loan Group Insurance Scheme (VLGIS). In their own
interest, employees are advised to join the scheme from the date of disbursement of first
instalment of the loan.