Fringe benefit tax
This query is : Resolved
18 March 2009
My pranams to people answering the question.
A sum was paid to interviewees(people attending the interview) for conveyance. Tickets were bought, and for others the same was re-imbursed. I want to know whether FBT is chargeable on the same.If there is any case to support your arguement, please quote the same. I want an expert-opinion on the same.
Thank you once again
Radhe krishna
A sum was paid to interviewees(people attending the interview) for conveyance. Tickets were bought, and for others the same was re-imbursed. I want to know whether FBT is chargeable on the same.If there is any case to support your arguement, please quote the same. I want an expert-opinion on the same.
Thank you once again
Radhe krishna
18 March 2009
FBT is not applicable. its a recruitment exp. and not employees welfare or tours or traveling.
18 March 2009
Shri Devanshi Gandhi,
Thank you for taking your time out for replying, but your reply is too blunt. Can you give me a more precise reply?
I'm seriously in want of an expert-opinion.
Thank you once again
Thank you for taking your time out for replying, but your reply is too blunt. Can you give me a more precise reply?
I'm seriously in want of an expert-opinion.
Thank you once again
18 March 2009
I agree with Miss Devanshi. Logically also, people attending the inreviews are not part of organisation unless and until recruited. FBT is leviable only on expenses which is incurred for or incurred by the people who are part of the organisation. Hence Recruitment expenses are not made part of FBT.
18 March 2009
If the part pertaining to 'food and beverage' under FBT is read, the act clearly states that any expense incurred by the employer on the employee or "ANY OTHER PERSON" is liable for tax under FBT.
There's no employee-employer relationship required here. Assuming, you give a bottle of pepsi to a guy attending the interview, you ought to pay FBT. The guy may get rejected, or otherwise.Recruitment expenses is not what I'm speaking about, because it includes a lot of ancillary expenses.
Thanks for your reply sir.
Be a little more clear sir.
There's no employee-employer relationship required here. Assuming, you give a bottle of pepsi to a guy attending the interview, you ought to pay FBT. The guy may get rejected, or otherwise.Recruitment expenses is not what I'm speaking about, because it includes a lot of ancillary expenses.
Thanks for your reply sir.
Be a little more clear sir.
18 March 2009
See, if you go little indepth of why FBT provisions were brought into picture, you will get more clarity. The example you gave is in nature of something called like Business Promotion, or Staff welfare. If it is not for business purpose then it will treated as personal expenses and disallowed. If you go little practically, then you can assume it clearly that you are not going to offer pepsi to any outsider unnecessary. All the expenses covered in FBT are those which were not justifiably saperable between the espenses incurred on employees and expense incurred for business. There was a very thin line, so FBT came into existense. In your case, it is clearly recruitment expenses, which is purely part of business expenses and not incurred even a single percent on employees. Hence logically also it should be out of purview of FBT. I hope I am able to make it clear now.
19 March 2009
Okay, I appreciate the reply.
But here again, I got a question. FBT clearly says that it taxes only that portion of the expenses, which the act thinks might result in a gain for the employer. That is where the percentage comes into play.
So the fundamental aspect here being that FBT has come into play to tax the portion of business gain that the act deems fit. Recruitment clearly results in a gain for the employer.
Any rulings to support your argument sir?
I'm really thankful for your replies and insight into the topic sir.
But here again, I got a question. FBT clearly says that it taxes only that portion of the expenses, which the act thinks might result in a gain for the employer. That is where the percentage comes into play.
So the fundamental aspect here being that FBT has come into play to tax the portion of business gain that the act deems fit. Recruitment clearly results in a gain for the employer.
Any rulings to support your argument sir?
I'm really thankful for your replies and insight into the topic sir.
19 March 2009
I could not understand your question this time. First of all, How recruitment results into business gain? Just because it is an expense. See, if you look at the expenses covered in FBT, you will get to know that maximum expenses are those which are made in name of business but the benefit is taken by the employees too. To avoid this disparity between salary, perquisites and business expenses, this FBT came into picture. I am not getting how the Recruitment is resulting into benefit of employees or say a Fringe Benefit to them. This is purely an expense of business and thats why it is not covered. If you are aware of todays practice of companies, they are charging FBT from their employees. This expense can not be said for benefit of employees.
19 March 2009
Please give some justifications why you are saying that recruitment expenses are just for employees and resulting into business gains.
19 March 2009
Why do you think, FBT is taxable at all?
Why do you think it is paid by employers?
By giving your employees a bottle of pepsi, you are improving the morale of the employees. BY this practise, the employee tries and improves his performance. So the employer is benefitted. If you'd rea dthe act, it says it's aimed at taxing the business gain that is earned.
When conveyance is provided, the act feels that a percentage of the conveyance results in a business gain. Hence you pay that % as FBT.
Do I even need to tell you that recruitment helps a business? How do you expand/diversify a business concern?
Why do you think it is paid by employers?
By giving your employees a bottle of pepsi, you are improving the morale of the employees. BY this practise, the employee tries and improves his performance. So the employer is benefitted. If you'd rea dthe act, it says it's aimed at taxing the business gain that is earned.
When conveyance is provided, the act feels that a percentage of the conveyance results in a business gain. Hence you pay that % as FBT.
Do I even need to tell you that recruitment helps a business? How do you expand/diversify a business concern?
20 March 2009
Sir, Now your discussion is moving little towards the matter whether FBT is a reasonable tax or not. What I am trying to make you understand the basic concept of FBT. I am not discussing here whether it is reasonable or not. I am also agree that there are some hardships in this law. But in todays practical scenarios where almost all organisations try to save taxes by hook and crook, this is a good move. Definitely, genuine taxpayers will get harm. There are needs of modification in FBT scheme in all.
And yes, you are again and again using the term that FBT is payable on Business gain, I am not getting it. Wht do u mean by Business Gain.
You are also having a good knowledge about FBT and thats why I want to discuss this law with you but not its pros and cons.
Thanks for a healthy discussion.
And yes, you are again and again using the term that FBT is payable on Business gain, I am not getting it. Wht do u mean by Business Gain.
You are also having a good knowledge about FBT and thats why I want to discuss this law with you but not its pros and cons.
Thanks for a healthy discussion.
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