13 February 2008
Free samples with advertisement value shall not be regarded as gifts.However in Ans.to Q.66 of the circular,CBDT has clerifyed that expenditure on free with products to trade or consumers is liable to FBT Similarly,any expenditure on free samples distributed to trade or consumers wii be liable to FBT as stated by CBDT in Ans.to Q. 64 of the circular under sales promotion expences in the case of Eskayef Ltd.245 ITR 116.
13 February 2008
The term fringe benefit is defined to mean any consideration by way of:
Any privilege, service, facility or amenity directly or indirectly provided by an employer, whether by way of reimbursement or otherwise to an employee or former employee.
Any free or concessional ticket provided by the employer for the private journey of an employee or a member of his family.
Any contribution made by an employer to an approved superannuation fund for employees
The method of computation of the value of fringe benefits for the levy of FBT as proposed is the aggregate of:
Cost of free or concessional tickets for private journeys of employees or their family members: Cost at which it is provided to the general public reduced by the amount paid or recovered from the employee.
Contribution to approved superannuation fund: Amount contributed
Festival celebrations, use of health club or similar facilities, and use of other club facilities, gifts and scholarships: 50 per cent of the expenses.
And 20 per cent of expenses in the case of: a) Provision for hospitality of every kind by the employer to any person, whether by way of provision for food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade, but does not include expenditure on or payment for, food or beverages provided by the employer to his employees in office or factory .
b) Expenses on conference other than expenses by way of fees for participation in the conference.
c) Sales promotion expenses, including publicity other than expenditure on advertisement.
THE DISTRIBUTION OF DAIRIES TO CUSTOMERS BY A COMPANY , FIRM,BOI,AOP,LOCAL AUTHORITY,ARTIFICIAL JURIDICIAL PERSON FORMS PART OF SALES PROMOTION AS PER ABOVE CLASSIFICATION AND IS LIABLE FOR 20% OF SUCH AMOUNT TAXABLE AS FBT UNLESS IT IS A HOTEL,SOFTWARE,PHARMA,CONSTRUCTION,CARRIAGE OF PASSENGERS OR GOODS BY MOTOR CAR WHERE 5% OF SUCH EXP. TAXABLE. IF IT IS A CARRIAGE OF PASSENGERS OR GOODS BY AIRCRAFT NIL AMOUNT IS TAXABLE. NORMALLY , THE EMPLOYER AND EMLOYEE RELATIONSHIP IS THE VITAL BASIS TO CHARGE FBT. BUT ONLY IN CASE OF SALES PROMOTION OR PUBLICITY EXP.THE LAW TOOK A DEVIATION. R.V.RAO
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