Ruchika Gupta (Chartered Accountant) (247 Points)
26 March 2009Hi friends! Pls help me regarding a query. A company provides lunch facility to its employees in its cafeteria, but charges a very very nominal amount say Rs 30 per head per month. What could be the possible intention behind this? B'oz if the Co. was not charging anything then it would not have been liable to pay any FBT? Apart from avoiding FBT can there be any possible intent behind this practice?
Darshan Bhutwala
(PRACTISING CHARTERED ACCOUNTANT)
(28 Points)
Replied 26 March 2009
Hi Ruchika,
The company would be paying FBT on the expenses incurred for staff welfare and not on the income recovered from it. So by charging Rs 30 and setting it off against the expenses it is in fact saving FBT.
Further it is always good from point of view of management to charge something from its employees and not cultivate a habit of getting things free of cost. This nominal amount can be increased on a later date but if company is not charging at all, it would be very difficult to charge them anything at a future date.
Regards,
CA Darshan Bhutwala
Ruchika Gupta
(Chartered Accountant)
(247 Points)
Replied 26 March 2009
So, do u mean to say that the company can set off the expenses incurred in providing lunch facility against the amount recovered from the employees and will pay FBT on whole expenses incurred as Staff welfare?
CAclubindia
