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ITEMS AND IT MEANS |
RATES |
TAXABLE AS FRINGE BENEFIT |
NOT TAXABLE AS FRINGE BENEFIT |
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1.ENTERTAINMENT: The word entertainment has not
been defined. As per dictionary it means amusement, distraction,
diversion, enjoyment, fun, nightlife, pastime, play, pleasure,
reaction and sport. |
20 |
a. Mess expenditure
b. Pooja expenditure in a temple with in factory
complex is taken as fringe benefit
c. Expenditure on amusement to clients or
customers.
d. Reimbursement of entertainment of
entertainment expenditure (bill in the name of the employer).
e. Reimbursement of entertainment of
entertainment expenditure for the benefit of employees as well as
customers and agents and for partners/directors and their family
members.
f. Party given to customers, sales agents,
senior employees, executives, directors, politicians, business
associates and competitors (incl. family members).
g. expenditure on purchase of music system for
employees/directors to be used by them during the lunch hours. |
a. Fixed festival allowance given to all employees
/ directors.
b. Fixed entertainment allowance given to
employees / director - employees or directors (non-employees).
c. Reimbursement of entertainment expenses
where the bills are in the name of the employees. |
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2.HOSPITALITY OF EVERY KIND: Provision for
hospitality of every kind by the employer to any person, whether by
way of provision of food or beverages or in any other manner
whatsoever and whether or not such provision is made by reason of an
expression implied contract or custom or usage of trade but does not
include-
a. "Expenditure on, or payment for, food or
beverages provided by the employer to his employees in office or
factory;
b. Any expenditure on or payment through paid
vouchers which are not transferable and usable only at eating joints
or outlets." |
HOTELS-5
OTHER-20 |
a. Expenditure n providing hospitality to employees
and guests in a star hotel is taken as fringe benefit.
b. expenditure on maintaining canteen in office
or factory by the employer - to the extent of food and beverages
provided to other than employees (auditors, customers, agents and
business associates. |
a. expenditure on maintaining canteen in office or
factory by the employer for employees only.
b. expenditure on payment made to contractor who
maintains a canteen in office / factory. |
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3.COFERENCE EXPENSES: A formal meeting for
discussion or debate. |
20 |
a. Employer organizes the conferences for updating
the knowledge of [partners and employees(faculty fee paid and rent of
the premises of conference hall and other expenses during the
conference.).
b. Participant fees paid for partners to update
the knowledge of the partners(travel, boarding and lodging included.).
c. Traveling, boarding and lodging expenses
incurred by the employer for employees to attend the conference. (for
directors[non-employees] of the companies participant fee also
included) . |
a. Fixed conference allowance given to all
employees / directors.
b. participant fees paid to update the knowledge
of employees. |
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4.SALES PROMOTION EXPENSES: Sales promotion
including publicity is taken as fringe benefit deemed to have been
provided to employees. |
20 |
a. Distribution of new year calendars,
diaries(bearing name of the company) to lawyers, and solicitors, book
sellers, sales agents, customers, teachers of law colleges, etc,.
b. Distribution of gift boxes to persons
connected to business on festivals(gifts bearing company name).
c. Distribution of gift boxes to employees on
occasions.
d. Gifts to dealers for achieving sallles
targets.
e. Expenditure on printing of price lists. |
a. Gift boxes distributed to relatives of
directors.
b. Advertisement of new product in different
news papers.
c. Advertisement for selling old plant and
machinery.
d. Advertisement for appointing sales manager.
e. Advertisement for publishing a notice as
required by Company Law.
f. Expenses for arranging press conference.
g. Expenses for fixing the banner in different
parts of the country about its products.
h. Purchasing paintings to include them in the
new year calendar which is printed for advertisement purposes by the
company. |
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5.EMPLOYEES WELFARE EXPENSES: Not defined in the
Act.
As per dictionary it means, the health, happiness,
and fortunes of a personor a group. |
20 |
a. Supply of free ration to factory workers /
employees. |
a. Maintenance of hospital where the employees get
free medical treatment.
b. Contribution towards RPF/URPF, RGF/URGF and
super annuation fund.
c. Reimbursement of medical treatment expen.
d. Fixed medical and lunch allowance.
e. Rent free accommodation to its employees.
f. Reimbursement of education expenses to its
employees.
g. Shares allotted to employees under exployee
stock option scheme.
h. Transfer of old assets to its employees at a
lower consideration. |
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6.CONVEYANCE, TOUR AND TRAVEL: Not defined in
the Act.
Conveyance: It is a means of transport. It is an
instrument of transportation from one place to another place.
Transport may be defined as a means to carry people or goods from one
place to another by road, water or air.
TOUR: A journey for pleasure in which several places
are visited or a short trip to view or inspect something.
TRAVEL: It means to pass from place to place,
whether for pleasure, instruction, business, or health, and the length
of the journey does not destroy the character of the occupation. |
Construction. -5
Pharmacy-5
Software-5
Others-20 |
a. Reimbursement of actual conveyance / traveling
expenses to its employees and directors(reimbursement may be limited.)
b. Foreign travel expenses to negotiate
dealings with MNC s or with others, which is allowed as expenses.
c. Hotel charges paid by employer for the stay
of the employer for the stay of the employee while they are in
tour(bills are in the name of the employer).
d. Employer has incurred expenses on conveyance,
tour and travel for business purposes(exp incurred by employers and
non-employees and by their family members. |
a. Fixed conveyance allowance or travel allowance
to the employees.
b. Reimbursement of private foreign journey
undertaken by employee.
c. Leave travel concession.
d. Hotel bills are in the name of employees. |
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7.USE OF HOTEL, BOARDING AND LODGING FECILITIES:
A hotel is a commercial establishment offering lodging to transients,
and often having restaurants, public rooms, shops, etc., that are
available to the general public. |
Pharmacy-5
Software-5
Others-20 |
a. Employer provides boarding and lodging
facilities provided to the employee for official purposes.
b. Even if the amount spent for the facilities
of the persons other than employees(like auditors, directors, foreign
collaborators consultants, technical persons on behalf of the company
of different business purposes. |
a. Reimbursement of hotel expenses to employees or
directors which is used for private purposes. |
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8.REPAIR, RUNNING AND MAINTENANCE OF MOTOR CAR:
It includes motor cars, not all motor vehicles. Consequently, while it
includes cars and jeeps, it does not include buses coaches, trucks,
tempos, three wheelers, two wheelers, bikes, bicycles, scooters,
lorries. |
Taxi Services -5
Others-20 |
a. Running and maintenance expenses incl.
depreciation of motor cars used by the employees, directors for
official purposes or for private of for both.
b. Running and maintenance expenses of motor
cars used b the partners for official purposes. |
a. Interest on loan for purchase of motor car.
b. Maintenance expenses of motor bikes of
employees met by employer.(official, private or both).
c. Buses are used to transporting employees
from their residence to factory, then the running and maintenance of
such.
d. Running and maintenance expenses of motor
cars used by the employees of sole proprietor or government, for
official and private usage. |
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9.REPAIR, RUNNING AND MAINTENANCE OF AIRCRAFT:
Expenditure on repair, running, fuel, maintenance, depreciation of
aircraft is fringe benefits deemed to have been provided to employees. |
Aircraft Serv. - 5
OTHERS - 20 |
a. Repair, running and maintenance expenses of
aircraft which is used by employees, directors, auditors, foreign
corroborators, consultants, etc., for official, private or for both. |
a. Interest on purchase of aircrafts which are used
by the employees, directors and nonemployees.
b. If the employer engaged in aircraft to
transport passengers from one place to another through aircraft. |
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10.TELEPHONE EXPENSES: It includes the
expenditure on use of telephone (incl. mobile phones). However,
expenditure on leased telephone lines are not included.
For the above purposes, telephone may be
installed in office, factory, godown, residence, guest house or at any
other place. Mobile phone can be used by directors, employees or by
non-employees or by any other persons(such exp even includes Service
Tax, late payment charges, and other charges.). Cost of mobile set is
not taken into consideration. |
20 |
a. Reimbursement of telephone bills to employees,
partners whether the services are for private or not.
b. payment of telephone bills of business of
business incl which are provided to the employees their residence. |
a. Fixed medical allowance.
b. Depreciation on telephone sets.
c. Expenditure on lease of lines. |
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11.MAINTENANCE OF GUEST HOUSE: It includes
maintenance expenditure of guest house, depreciation of guest house
has not been expressly included. If guest house is used for training
of employees, directors, other than employees like distributors,
agents, etc., then maintenance expenditure of guest house is not taken
as fringe benefit. |
20 |
a. Guest house maintenance expenses, if it is used
by outsiders(like foreign collaborators, customers, clients, lawyers,
representing the company before courts and tribunals, |
a. Guest house expenses at factory which is used by
employees and directors when they come for factory visit.
b. Guest house is used for training of the
employees / directors / distributors/ customers and sales agents.
c. Rent paid for guest house.
d. Interest on loan taken for guest house.
e. Depreciation on guest house building and
other assets thereon. |
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12.FESTIVAL CELEBRATIONS: Festival is defined as
a day or time of religious or other celebrations marked by feasting
ceremonies, or other observances. It can also be defined as a period
or program of festival activities, cultural activities or
entertainment. |
50 |
a. Distribution of sweets and gifts on any
ceremonial occasion to employees, directors, distributors, agents and
customers.
b. If any party given on any festivals, such
expenses. Participants may be employees, directors, customers of the
company and foreign collaborators. |
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13.HEALTH CLUB AND SIMILAR FECILITIES: Not
defined in the Act.
Generally it means service for physically well being
such as sauna and steam bath, Turkish bath, solarium, spas, reducing
or slimming saloons, gymnasium, yoga, meditation, massage(excl.
therapeutic massage) or any like service. |
50 |
a. Expenditure on maintenance of health club
excluding the depreciation and club can be used by
employees/workers/directors only, non_employees only or by both.
b. If the health club is not owned, then any
payment made to club. |
a. Depreciation on health club building and
equipment thereon. |
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14.ANY OTHER CLUB FACILITY: Generally it is
incorporated or unincorporated association of persons who have common
purposes. It can be in the form of society, affiliation, community,
league, federation, union, consortium, coterie, guild, lodge,
sorority, fraternity, sisterhood, brotherhood, alliance, company,
coalition, etc., |
50 |
a. Company Providing sports facilities and light
entertainment to employees. The club can be used by the employees or
directors, or by non_employees.
b. If club is not owned, and the company makes
annual payment to the club for such services.
c. Membership in any club and it can be used by
employees, directors, auditors, architects etc., of the co. for
different facilities.
d. Reimbursement of club bills to employees,
bills are on employer name. |
a. Suppose if the club provides only boarding and
lodging, then it is taxable as use of hotels, boarding and lodging but
not under club facility.
b. Reimbursement o club bills to employees,
bills are in the name of the employees. |
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15.GIFTS: Gift is a transfer of property from
one person to another without consideration, whether the asset is
movable or not. |
50 |
a. Gifts given on any ceremonial occasion to its
employees, customers and foreign collaborators.
b. Gifts to customers for promotion of sales.
c. Gifts made to shareholders in the agm of the
company(employees may be share holders). |
a. cash gifts to employees in appreciation of past
services. |
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16.SCHOLORSHIPS: Scholarship is an allowance
given to a student to aid him in prospecting his studies. The amount
may or may not cover the expenses on education. |
50 |
a. Scholarships given to public, employees and
their relative, or to distribution and their family members.
b. Scholarships given on conditional basis,
that to serve the company after studies. |
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