Cab Service along with Conveyance Allowance-FBT or I.Tax
This query is : Resolved
21 May 2009
Hi,
A company provides cab facility to its employee for their pick up from home to office and drop from office to home. Simultaneously, it also pays Rs 800 p.m as conveyance allowance as salary component to its enmployee. Now, what will be the tax implications?
a) Will any of these exp attract FBT liability on part of Company?
b) Will any of these beneifits be taxable in hands of employee or both expenses will be exempt for both employee & employer?
A company provides cab facility to its employee for their pick up from home to office and drop from office to home. Simultaneously, it also pays Rs 800 p.m as conveyance allowance as salary component to its enmployee. Now, what will be the tax implications?
a) Will any of these exp attract FBT liability on part of Company?
b) Will any of these beneifits be taxable in hands of employee or both expenses will be exempt for both employee & employer?
21 May 2009
Transport allowence up to 800PM is exempted under sec 10 in hands of employees
Transporation facility provided by employer to employees is exempted from FBT
Transporation facility provided by employer to employees is exempted from FBT
21 May 2009
So, it means that both the benifits will be exempt in hands of employer & employee?
21 May 2009
Yes, you are correct. Transport facility is not liable to FBT after amendment of sub section 3 of Section 115WB from AY 2007-2008.
Transport allowances are also exempted up to 800 P.M.
Transport allowances are also exempted up to 800 P.M.
21 May 2009
Please refer the subsection (3) of Section 115WB
Section 115WB:
(1).....
(3) For the purpose of sub section (1), the privilege, service, facility or amenity does not include perquisite in respect of which tax is paid or payable by the employee or any benefit or amenity in the nature of free or subsidized transport or any such allowances provided by the employer to his employees for the journeys by the employees from their residence to the place of work or such place of work to the place of residence.
This clause was added by finance act 2006 & effective from AY 2007-2008.
Prior to that as per the FAQ no 104 of CBDT circular No 8/2005 such transport facility is not liable to FBT only if such facility is in lieu of conveyance/transportation allowances.
Refer following FAQ of that circular
Whether expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence would attract FBT ?
104. The free or subsidized transport provided to employees for journeys from their residence to the place of work or such place of work to the place of residence is in lieu of conveyance/transportation allowance, which is not liable to FBT. Accordingly, the expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence will not be liable to FBT.
Section 115WB:
(1).....
(3) For the purpose of sub section (1), the privilege, service, facility or amenity does not include perquisite in respect of which tax is paid or payable by the employee or any benefit or amenity in the nature of free or subsidized transport or any such allowances provided by the employer to his employees for the journeys by the employees from their residence to the place of work or such place of work to the place of residence.
This clause was added by finance act 2006 & effective from AY 2007-2008.
Prior to that as per the FAQ no 104 of CBDT circular No 8/2005 such transport facility is not liable to FBT only if such facility is in lieu of conveyance/transportation allowances.
Refer following FAQ of that circular
Whether expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence would attract FBT ?
104. The free or subsidized transport provided to employees for journeys from their residence to the place of work or such place of work to the place of residence is in lieu of conveyance/transportation allowance, which is not liable to FBT. Accordingly, the expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence will not be liable to FBT.
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