FBT on re-imbursement of medcial exp to staff

This query is : Resolved

Rahul (Querist)
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30 July 2008 Dear All,

I had paid Rs 15000/- to our employee as medical re-imbursement. Is it liable to pay FBT on medical re-imbursement. what is the section code & what is the rate.

Thanks

Rahul

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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30 July 2008 This clause of Section 115WB (2) considers expenditure incurred towards welfare of employees as a Fringe Benefit and hence makes it liable to Fringe Benefit Tax. The purpose of expenditure should be direct/ indirect benefit of the employee (s) but at the same it excludes any expenditure incurred by the employer on employees of the following nature:

Fulfillment of any Statutory Obligation;

Mitigation of Occupational Hazards;

To provide First aid in the Hospital run by the Employer.

valuation of fringe benefits:

20% of total expenditure incurred as defined above shall be the value of Fringe Benefits chargeable to tax under this clause of Section 115WB (2)(E).

PLEASE NOTE:

If the Employer makes any contribution or takes some steps or measures without any statutory obligation, say incurs medical expenditure reimbursement up to Rs.15,000, expenditure on employees’ colony, then all these expenditures are liable to Fringe Benefit Tax;

If the expenditure on treatment of injuries suffered during the course of performance of duties, but the treatment is undertaken at a dispensary not maintained by the employer, then such expenditure is liable to Fringe Benefit Tax, However, if such expenditure is pursuant to a statutory obligation, it will not be liable to Fringe Benefit Tax;

If there is expenditure by way of subsidy to a school not meant exclusively for the employees’ children then on the grounds of proximate purpose, it is chargeable to Fringe Benefit Tax;

There is no Fringe Benefit Tax for expenditure on wearing apparel, safety shoes, and uniform for the employees’ in case of it being a Statutory Obligation, else would be liable to Fringe Benefit Tax;

The expenditure on books, periodicals as well as for prizes, rewards for achievements of employees are liable to Fringe Benefit Tax;

Any expenditure incurred for the provision of facilities like garden, site cleaning, light decoration school, library, mess, television, cable connection etc in employees’ colonies is for the purposes of promoting employee welfare and hence liable to Fringe Benefit Tax;

Any expenditure incurred on prizes/rewards to employees for achievements falls under this clause and hence is liable to Fringe Benefit Tax;

The expenditure incurred for the purpose of providing transport facility to the children of employees is in the nature of expenditure on employees’ welfare and hence falls under this clause and hence is liable to Fringe Benefit Tax;