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

Clarification on Fringe Benefit Tax: Office refreshments exempt, but outside food reimbursements attract FBT per CBDT 2005 circular. An individual raised a query about the liability of Fringe Benefit Tax (FBT) on refreshments provided by employers to employees. A respondent clarified that according to a circular issued by the Central Board of Direct Taxes (CBDT) in 2005, food or beverages provided inside the office are not subject to FBT. However, if the employer reimburses employees for food or beverages consumed outside the office, it is liable for FBT. The respondent noted the peculiar interpretation of these provisions.