Liability of fbt

[Atul Anand]

Tea, coffee and other refreshment at the time of duty porvide to the employee by employer is liable to Frienge Benefit Tax

[Guest]

CBDT issued a circular clarifiying several issues vide FAQ on 30 August 2005 vide Circular No.8/2005 dated 29 August 2005 on FBT, Amongst the issues clarified is issue on cost of food or beverage provided inside office and outside office.The Circular also clarifies that if the employer reimburses the cost of food or beverages, on account of late sitting, that would be covered within FBT. However, if the employer directly procures the food there is no liability for FBT. Thus you will observce that refreshments and food provided inside office has non FBT value whereas if the refreshments are taken outside and reimbursed by the employer, it has FBT value. Quite starnge way of interpreting!!

AI Summary

Fringe Benefit Tax: employer procured on site food not liable, but reimbursements for outside meals attract FBT. Fringe Benefit Tax liability attaches to employer reimbursements for food or beverages taken outside the workplace, whereas food or refreshments directly procured and supplied by the employer inside the office do not attract FBT; the distinction rests on whether the benefit is a direct supply or a reimbursement, as clarified in the relevant CBDT FAQ and circular.