The employer defines a flexi pool amount (e.g., Rs 30,000 per year) and a list of eligible components. Each component has an annual limit set by company policy or tax rules. Employees log in to the self-service portal, allocate amounts across components up to the pool limit, and submit. Zoho Payroll distributes the monthly equivalent in each payslip.
Some flexi components carry tax advantages under specific conditions, even though their exemptions were reduced post-2018. Meal coupons (up to Rs 50 per meal, two meals per working day) and certain professional development reimbursements can reduce taxable income when supported by bills. Zoho Payroll processes approved reimbursement claims and adjusts TDS accordingly.
If an employee does not submit reimbursement bills for flexi claims by year end, the unclaimed amount becomes taxable. Zoho Payroll handles this reconciliation during the final pay run of the financial year, adding unclaimed flexi amounts to taxable income and revising the TDS computation before generating Form 16.
Flexi Benefits is a Zoho Payroll module that allows employees to allocate a defined compensation budget across a menu of benefits such as meal coupons, book allowances, or gift vouchers. Employees choose their preferred mix at the start of the year, and Zoho Payroll applies it to monthly payslips with appropriate tax treatment.
Some flexi components reduce taxable income when supported by bills and within prescribed limits. For example, meal coupons up to Rs 50 per meal can be partially exempt. Zoho Payroll processes bill-backed claims and reduces TDS accordingly. Unclaimed amounts are added back to taxable income at year end.
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