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Fringe Benefit Tax

Brahma (Profession) (40 Points)

21 August 2007

Dear Everyone pl find following case:

A Pvt. Ltd.company where there is no employee everyone abt 30 staff working as a consultant, they incure following expenses

Staff welfare(like tea coffee snax etc.)

conveyance reimbursement for official work

telephone reimbursement

Lodging and boarding expenses for office work

Can some one clarify WHETHER THE COMPANY IS LIABLE FOR FBT EVEN THOUGH THERE IS NO EMPLOYEE ON BOARD...ALL ARE CONSULTANT....

YR SUGGESTIONS ??

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10 Replies

Sonia Uthuppu (Chartered Accountant) (34 Points)
Replied 21 August 2007

Hi, Charging Section(115WA) of FBT reads as follows; 'In addition to the income tax charged under this act, there shall be of April 2006, additional income tax(in this act referred to as fringe benefit tax) in respect of the fringe benefits provided or deemed to have been provided by an EMPLOYER TO HIS EMPLOYEES during the previous year at the rate of 30% on the value of such fringe benefits. Thus its clear that where there is no employer employee relationship, these expenses are out of the purview of FBT. Regards, Sonia

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Brahma (Profession) (40 Points)
Replied 21 August 2007

Thanks for the same... I hope your answer will remain same even though we incure all other expenses like staff welfare, conveyance, telephone,travel...... but we will not have Zero FBT liabliity just because there is no employer employee relation ship...kindly confirm.. do we need to follow any procedure for the same....

Sonia Uthuppu (Chartered Accountant) (34 Points)
Replied 22 August 2007

The expense does not qualify for FBT unless there is an employer employee relationship irrespective of the nature of the expense. The provision for filing returns ( 115 WD) will also not be applicable in such a case.

Brahma (Profession) (40 Points)
Replied 23 August 2007

Thanks if you get any such case pl pass on to me

Pavithra (student) (44 Points)
Replied 26 August 2007

It is clear that for FBT to become liable employer - employee relationship has to exist. In the absence of such a relationship, the firm will not be liable to FBT.