16 May 2009
Reply to your query lies in the following clarification provided by CBDT in circular no No. 8 dated 29 August 2005 at question no 104 -
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? 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.
Thus the free transport limited only to transportation from residence of office and back is not liable to FBT. For any other free transportation facility is covered under FBT
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