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FBT on School Fees

Nagesh M R (Service) (113 Points)

31 December 2008

Dear All,

We are MNC company, for all Overseas employees children we are paying School Fees from the company,

Whether FBT is applicable on school fees or not ???

If applicable @ what percentage

Regards,

Nagesh M R

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7 Replies

Shudhanshu Agrawal (Business) (2570 Points)
Replied 31 December 2008

For this if possible pls tell us in what ledger u are taking this school fees while passing the journal entry

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Nagesh M R (Service) (113 Points)
Replied 31 December 2008

We accounting under ledger "School Fees"

Sushant Raul (Article Traine) (22 Points)
Replied 31 December 2008

Yes.

Mk (36 Points)
Replied 31 December 2008

Originally posted by :Nagesh M R

Dear All,
We are MNC company, for all Overseas employees children we are paying School Fees from the company,
Whether FBT is applicable on school fees or not ???
If applicable @ what percentage
Regards,
Nagesh M R

Hi Nagesh,

School fees paid by the company is taxeble in the hand of the employee as perquisites. So, this paid by the company is not lible to FBT. This is taxeble in the hand of employee as salary.

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 31 December 2008

It can be offered for FBT under the head 'Employee Welfare' @ 20% of the school fees. The tax outflow effectively comes to 6% of the school fees(approx - 20% of 33.33%).

Alternatively, it can be treated as perk. In which case, it will be included in the salary of the employee and the employee shall be entitled to deduction u/s 80C in respect of tuition fees paid. The perk shall be exempt if the amount of tuition fees do not exceed Rs. 1000 p.m. per child - max 2 children

In my view, any of the above alternative can be adopted taking the tax outflow in consideration. IF the benefit is provided to small number of employees, Section 17(2) gets attracted. If it is provided to majority of employees, section 115 (FBT) gets attracted.