FBT Applicable or Not on Reimbursment of Exp ?
This query is : Resolved
15 June 2009
Dear Experts
If company pays any expend on hotel, boarding & lodging for employees or for any other person including an outsider consultancy firm, who is claiming reimbursement of their expenses paid by company is under FBT.
If company pays any expend on hotel, boarding & lodging for employees or for any other person including an outsider consultancy firm, who is claiming reimbursement of their expenses paid by company is under FBT.
15 June 2009
On reimbursement of expenses to employees FBT will be applicable but not to an outsider consultancy firm.
15 June 2009
Question no. 9 & 13 of circular no. 8/2005 regarding Explanatory Notes on the provisions relating to Fringe Benefit Tax
9. Whether reimbursement of expenditure to an employee purely of a business nature is liable to FBT? (For example, payment of sales tax or stamp duty paid on behalf of the employer and reimbursed later to him).
Ans. Reimbursement of expenditure to an employee is a fringe benefit provided to an employee within the meaning of the clause (a) of sub-section (1) of section 115WB. However, the FBT is payable only in respect of such reimbursements which are for the purposes listed in clauses (A) to (P) of sub-section (2) of section 115WB and for which the computation is provided in section 115WC. If computation is not provided in respect of any fringe benefit provided or deemed to have been provided, such benefit is not liable to FBT.
13. Whether expenditure incurred by a professional like a lawyer or auditor on conveyance, tour and travel, and reimbursed by the client, is liable to FBT in the hands of the client?
Ans. The reimbursement of expenditure incurred for the purposes of conveyance, tour and travel is essentially a component of professional fee paid by the client to the lawyer or auditor. Accordingly, such expenditure is not liable to FBT in the hands of the client.
9. Whether reimbursement of expenditure to an employee purely of a business nature is liable to FBT? (For example, payment of sales tax or stamp duty paid on behalf of the employer and reimbursed later to him).
Ans. Reimbursement of expenditure to an employee is a fringe benefit provided to an employee within the meaning of the clause (a) of sub-section (1) of section 115WB. However, the FBT is payable only in respect of such reimbursements which are for the purposes listed in clauses (A) to (P) of sub-section (2) of section 115WB and for which the computation is provided in section 115WC. If computation is not provided in respect of any fringe benefit provided or deemed to have been provided, such benefit is not liable to FBT.
13. Whether expenditure incurred by a professional like a lawyer or auditor on conveyance, tour and travel, and reimbursed by the client, is liable to FBT in the hands of the client?
Ans. The reimbursement of expenditure incurred for the purposes of conveyance, tour and travel is essentially a component of professional fee paid by the client to the lawyer or auditor. Accordingly, such expenditure is not liable to FBT in the hands of the client.
15 June 2009
Yes, on both the expenditures, FBT is leviable.
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