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Expenses

Expense Policy for Employees: Template and Examples

An expense policy sets what employees can claim, the limits by grade and city, the bills needed and who approves. Copy this template for Indian companies.

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An expense policy for employees is the written rule book that says which business costs staff may claim, how much they can spend by grade and city, which bills they must submit and who approves. Without one, every claim becomes a negotiation, and a hotel booked without the company GSTIN loses its input tax credit.

A policy only helps if it is checked on every claim. In OneFinOps, the Expenses Agent applies it when the receipt comes in.

Key takeaways

  • Keep it short, with the limits in an annexure updated each April.
  • Set limits by grade and city tier; per diem for meals.
  • Require GST invoices with the company GSTIN for hotels and flights.

Expense policy template for Indian companies

Copy the text below and replace the items in square brackets. The limits are examples for a mid-sized company as of September 2026.

1. Scope. This policy covers business expenses incurred by employees of [Company Name] in India. Vendor purchases above [₹25,000] go through procurement with a purchase order.

2. Principle. An expense is reimbursable only if it is incurred wholly for the Company’s business, is within the limits in Annexure A, and has the documents in clause 5.

3. Travel and hotels. Outstation travel is approved in advance by the reporting manager. Book in the Company name, with the Company GSTIN for the state where the service is provided. Hotels are paid up to the nightly cap in Annexure A, inclusive of taxes, and meals through a per diem with no bills required.

4. Local conveyance. Cabs and autos at actuals up to [₹3,000] per month with receipts. A personal vehicle at [₹12] per km for a car and [₹5] per km for a two-wheeler, with a trip log.

5. Receipts and GST. A bill is required for every expense above [₹500], except the per diem. Hotels, flights and purchases need a GST tax invoice with the Company’s name and GSTIN. Without the Company GSTIN, Finance may reimburse the amount net of GST.

6. Advances. Travel advances up to [70%] of the estimated cost are settled within [15] days of return.

7. Claims and approvals. Submit claims within [30] days of the expense. Claims up to ₹25,000 need the reporting manager; above that, the department head too, and above ₹1,00,000 the CFO. No employee approves their own claim.

8. Not reimbursed. Personal travel, fines, alcohol outside approved client events, family costs, and anything without the required documents.

9. Violations. Out-of-policy amounts are not paid or are recovered. False, altered or duplicate bills are misconduct under the disciplinary policy.

10. Ownership. Owned by the [CFO]. Annexure A is reviewed every April. Effective date: [1 October 2026].

Annexure A: expense limits (example)

Tier 1 is Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Pune and Ahmedabad. Tier 2 is other state capitals and large cities. Tier 3 is everywhere else.

GradeAirTrainHotel per night (Tier 1 / 2 / 3)Per diem per day (Tier 1 / 2 / 3)
L1: ExecutivesEconomy, if over 500 km3AC₹4,500 / ₹3,500 / ₹2,500₹900 / ₹700 / ₹500
L2: ManagersEconomy2AC₹6,500 / ₹5,000 / ₹3,500₹1,200 / ₹1,000 / ₹700
L3: Senior managersEconomy; premium economy over 4 hours1AC₹9,000 / ₹7,000 / ₹5,000₹1,800 / ₹1,400 / ₹1,000
L4: CXOs, directorsBusiness1ACActuals, reasonable₹2,500 / ₹2,000 / ₹1,500

Example: Arjun (L2) stays two nights in Mumbai at ₹7,800 a night. His cap is ₹6,500. Without a pre-approved exception, the Company pays ₹13,000 and ₹2,600 is his cost.

How OneFinOps puts the policy to work

Your Annexure A becomes rules by category, grade and location, and the employee sees the limit before spending. The Expenses Agent reads each receipt, applies the rule, approves claims inside policy and posts them with the recoverable tax split out. What breaks a rule goes to the manager with the rule quoted.

In most setups the policy lives in a PDF, and the rule is discovered when finance rejects the claim weeks later. Here the rule is checked at capture, and rule changes carry effective dates.

See how the Expenses Agent works

Sources

Frequently asked questions

What should an expense policy include?

Scope, travel class and hotel limits by grade, per diem, conveyance and mileage rates, bill and GST invoice rules, advances, the claim deadline, approval levels, non-reimbursable items and what happens when the policy is broken.

Why should hotels and flights be booked with the company GSTIN?

The employer can claim input tax credit only on a valid tax invoice showing its own GSTIN. If the employee is billed personally, the GST becomes a cost even when the trip is fully for business.

Is a per diem better than actual meal bills?

A per diem is simpler: no meal bills to collect or check, and a fixed cost per travel day. Many Indian companies use a per diem for meals and actual bills for hotels and flights.

What happens if an employee violates the expense policy?

The out-of-policy amount is not paid or is recovered, repeated breaches are reported to the manager and HR, and fake or altered bills are handled under the disciplinary policy, which can include termination.

Topics

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From the glossary

Related terms.

Expense policy Expense Policy An expense policy is a formal company document that defines rules for employee spending, reimbursement limits, approval workflows, and documentation requirements for business expenses. Also called travel and expense policy, reimbursement policy, T&E policy GST basics GST (Goods and Services Tax) India's unified indirect tax that replaced multiple central and state levies, creating a single national market for goods and services. Also called Goods & Services Tax Input tax credit Input Tax Credit (ITC) A mechanism that allows businesses to claim credit for GST paid on purchases and expenses, reducing their overall output tax liability. Also called input credit, GST input credit, input tax credit under GST Expense policy Per Diem Per diem is a fixed daily allowance paid to employees to cover routine expenses like meals, local transport, and incidentals during business travel, replacing the need for individual receipt submission. Also called daily allowance, per diem allowance Purchase orders Purchase Order (PO) A purchase order is a formal document issued by a buyer to a vendor that specifies the items, quantities, agreed prices, and delivery terms for a procurement transaction. Also called PO number, purchase order form Expense management Corporate Card A corporate card is a company-issued credit or prepaid card that employees use for authorised business expenses, providing centralised spending control, real-time visibility, and simplified reconciliation. Also called company card, corporate credit card, business card

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