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Cp knowledge: 31 fbt presentation ankit

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Cp knowledge: 31 fbt presentation ankit

  1. 1. <ul><li>Welcome to session on </li></ul><ul><li>Fringe Benefit Tax </li></ul><ul><li>Scope </li></ul><ul><li>And </li></ul><ul><li>Financial Implications </li></ul>
  2. 2. Contents <ul><li>Presentation </li></ul><ul><li>Improvement planned in gathering data for FBT </li></ul><ul><li>Questions /Answer Time </li></ul>
  3. 3. Brief Overview <ul><ul><li>Introduced by Finance Act, 2005 and applicable from FY </li></ul></ul><ul><ul><li>2005-06. </li></ul></ul><ul><ul><li>Rationale behind FBT is to tax benefits that are collectively enjoyed by employees ( not taxed in their hands ) and certain deemed fringe benefits. </li></ul></ul><ul><ul><li>FBT is payable by employer at tax rates applicable for the financial year on the value of Fringe Benefits (Applicable Rate for FY 07-08 is 30% + Surcharge + Cess ) </li></ul></ul><ul><ul><li>FBT is chargeable on defined % of total expenses falling under each category defined by the Finance Act. </li></ul></ul>
  4. 4. Valuation of Fringe Benefits 100 Any privilege, service facility provided directly or indirectly, provided by the employee either through reimbursement or otherwise. ( to his employees including former employees ) 20 Employees’ welfare 20 Sales Promotion including publicity 20 Conference 20 Provision of hospitality 20 Entertainment; Fringe benefits shall be deemed to have been provided by an employer if any expense is incurred or payment made for the following purposes: 100 Employer’s contribution to an approved Superannuation Fund; 100 Any free or concessional tickets provided by the employer for private journeys undertaken by the employees or their family members; (excluding that included in LTA/LTC) Value (in %) Description of Fringe Benefit s
  5. 5. Valuation of Fringe Benefits (contd..) 50 Scholarships 5 Tour & Travel including (Foreign Travel) 50 Gifts; and 50 Use of any other club facilities; 50 Use of health club and similar facilities; 50 Festival Celebrations; 20 Maintenance of any accommodation in the nature of guest house 20 Use of Telephone (including mobile phone, and other than expenditure on leased telephone lines; 20 Repair, running (including fuel), maintenance of motor cars and the amount of depreciation thereon; 20 Use of hotel, boarding and lodging; 20 Conveyance Value (in %) Description of Fringe Benefit s
  6. 6. Contribution to Superannuation Fund <ul><li>Excludes </li></ul><ul><li>The amount of Contribution which </li></ul><ul><li>does not exceeds 1 Lakh rupees in </li></ul><ul><li>respect of each employee. </li></ul>
  7. 7. Entertainment <ul><li>Includes Expenditure for </li></ul><ul><li>Exhibitions </li></ul><ul><li>Performance </li></ul><ul><li>Amusements </li></ul><ul><li>Games/Sports </li></ul><ul><li>Meetings/Get together of employees and their family on non festive occasions </li></ul><ul><li>For affording some sort of amusements and gratification . </li></ul>
  8. 8. Conference <ul><li>A training Programme entails congregation of number of </li></ul><ul><li>person for discussion or exchange of views. </li></ul><ul><li>Includes </li></ul><ul><li>Expenses for attending training/conference outside factory/office such as Hotel, Travelling, Conveyance </li></ul><ul><li>Dealers and Vendors Conference. </li></ul><ul><li>Excludes </li></ul><ul><li>In house training of Employees </li></ul><ul><li>Participation fees of employees in any outside conference/training </li></ul>
  9. 9. Provision for Hospitality <ul><li>Includes </li></ul><ul><li>Every kind of provision for hospitality through food or beverages or in any other manner. </li></ul><ul><li>Excludes </li></ul><ul><li>Expenditure on Food or Beverages provided by Employer to Employees in Office or Factory. </li></ul><ul><li>Expenditure on Non-Transferable Food Coupons </li></ul>
  10. 10. Sales Promotion including publicity <ul><li>Includes </li></ul><ul><li>Expenses for Free offers (with products) such as freebies like tattoos, cricket cards or similar products to trade or consumers. </li></ul><ul><li>Excludes </li></ul><ul><li>Advertisement in any print or electronic media or transport system. </li></ul><ul><li>Holding or participation in any press conference, fair, exhibition or convention. </li></ul>
  11. 11. Sales Promotion including publicity <ul><li>Exclusions Continued </li></ul><ul><li>Publication of any notice (under any law, Court or Tribunal order) in any print or electronic media. </li></ul><ul><li>Advertisement through Signs, art work, painting, banners, direct mail, Electric spectaculars, kiosks, hoardings, bill boards or by way of such other medium. </li></ul><ul><li>Payment to any advertising agency for the purposes of above mentioned expenditures . </li></ul>
  12. 12. Sales Promotion including publicity <ul><li>Exclusions Continued </li></ul><ul><li>Sponsorship of sports event or any other event organized by Govt agency or any trade association </li></ul><ul><li>Expenditure on distribution of free samples of Medicines or of Medical equipments to Doctor </li></ul><ul><li>Expenditure by way of payment to any person of repute for promoting the sale of goods or services </li></ul>
  13. 13. Sales Promotion including publicity <ul><li>Exclusions Continued </li></ul><ul><li>Brokerage and Selling Commission </li></ul><ul><li>Reimbursement of Salesman (Expenses) </li></ul><ul><li>Sales Discount, Rebates allowed to whole sale dealers, customers or bonus points given to Credit Card Customers. </li></ul><ul><li>Incentives to Distributors. </li></ul><ul><li>Product marketing research Expenses </li></ul><ul><li>(If Outsourced) </li></ul><ul><li>Call Center Charges for canvassing Sales and carrying out post sale activities. </li></ul>
  14. 14. Employees Welfare <ul><li>Includes </li></ul><ul><li>Group Health/Accident/Medical/Life Insurance, Workman Compensation Insurance. (if Statutory not required) </li></ul><ul><li>Medical Reimbursement up to limit of 15000/-. </li></ul><ul><li>Reimbursement of late night snacks to employees. </li></ul><ul><li>Uniform if not statutory required </li></ul><ul><li>Reimbursement of Expenditure on Books and Periodicals </li></ul><ul><li>Prizes/Rewards (Non Monetary )to Employees </li></ul><ul><li>Transportation facility to children of Employees. </li></ul>
  15. 15. Employees Welfare <ul><li>Inclusions (Continued) </li></ul><ul><li>Expenses on treatment of Injuries during working hours in a hospital not maintained by employer if statutorily not required. </li></ul><ul><li>Subsidy to school not meant exclusively for employee’s children. </li></ul><ul><li>Gardening, Site cleaning, Light Decoration, School, Library, Mess, Television, Cable Connection etc in Employees Colonies. </li></ul>
  16. 16. Employees Welfare <ul><li>Excludes </li></ul><ul><li>Payment for Statutory Obligation/Mitigate occupational Hazards or provide first Aid facility or Dispensary Maintained or run by employer. </li></ul><ul><li>Expenses in Hospital /Dispensary maintained by employer for injuries during working hours. </li></ul>
  17. 17. Conveyance <ul><li>Includes </li></ul><ul><li>Reimbursement for Car Expenses on basis of bills submitted, Driver Salary on Declaration. </li></ul><ul><li>Lease Rentals of the vehicles on Operating Lease. </li></ul><ul><li>Excludes </li></ul><ul><li>Free or Subsidized transport provided to employees for Journey from Home to Office Back </li></ul>
  18. 18. Hotel Boarding and Lodging <ul><li>Includes </li></ul><ul><li>All Hotel Expenses </li></ul><ul><li>Pre-Diem Allowance paid to employees for meeting Hotel Expenses. (Daily Allowance) </li></ul>
  19. 19. Running/Maintenance of Motor Car <ul><li>Includes </li></ul><ul><li>Expenses on Repair and Maintenance of Motor Cars </li></ul><ul><li>Lease rentals for Finance Lease of Cars. </li></ul><ul><li>Depreciation of Vehicles on Pro-rata basis </li></ul><ul><li>Interest on Loan for Cars </li></ul><ul><li>Driver’s salary </li></ul><ul><li>Garage and Parking slots rent </li></ul>
  20. 20. Running/Maintenance of Motor Car <ul><li>Excludes </li></ul><ul><li>Expenses for Delivery/ Display Vans trucks/Lorries ,ambulance and tractor </li></ul>
  21. 21. Use of Telephone <ul><li>Includes </li></ul><ul><li>Payments for Mobile Phone </li></ul><ul><li>Payment of any Telephones in the office/Factory. </li></ul><ul><li>Excludes </li></ul><ul><li>Payment made for Leased Telephone Lines. </li></ul>
  22. 22. Guest House <ul><li>Includes </li></ul><ul><li>Rent for Guest House </li></ul><ul><li>Any Accommodations in Nature of Guesthouse </li></ul><ul><li>Food at Guest House </li></ul><ul><li>Maintenance charges of Guest House </li></ul><ul><li>Contract Charges for Guesthouse Staff </li></ul>
  23. 23. Guest House <ul><li>Excludes </li></ul><ul><li>Capital Expenditure in Guest House </li></ul><ul><li>Depreciation on Guest House </li></ul>
  24. 24. Festival Celebration <ul><li>Includes </li></ul><ul><li>Meeting of Employees or their families on the occasion of Navratri, Diwali, ID, Christmas, New Year. </li></ul><ul><li>Excludes </li></ul><ul><li>Celebration Expenses of Independence Day & Republic Day. </li></ul>
  25. 25. Use of Club and Similar Facility <ul><li>Includes </li></ul><ul><li>Entrance Fees or Membership Fees of Club </li></ul><ul><li>Excludes </li></ul><ul><li>Depreciation on Club Building if owned by Employer </li></ul>
  26. 26. Gifts <ul><li>Any Thing Given or Presented without Consideration. </li></ul><ul><li>Includes </li></ul><ul><li>Gifts under Trade Scheme for Promotion of Company’s Product </li></ul><ul><li>Gifts to Customers </li></ul><ul><li>Gifts to Employees (On any Occasion) </li></ul><ul><li>Gifts in Kind (At Cost) </li></ul>
  27. 27. Scholarships <ul><li>Includes </li></ul><ul><li>Education of Employees sent to Education Institute </li></ul><ul><li>Expenses Incurred /Paid for Scholarships either to Employees or any other Person. </li></ul><ul><li>(Student and Trainees) </li></ul>
  28. 28. Tour & Traveling (Including Foreign) <ul><li>Includes </li></ul><ul><li>Payments made for Traveling for any Employee or any purpose. </li></ul><ul><li>Excludes </li></ul><ul><li>Payments made for Traveling for the purpose of Conference </li></ul><ul><li>Payment for LTC/LTA to Employees. </li></ul>
  29. 29. Important Notes for FBT <ul><li>Employer Employee Relation is Prerequisites for the Levy of FBT </li></ul><ul><li>Proximate Purpose to be looked for the Classification under different clause. </li></ul><ul><li>Includes </li></ul><ul><li>Pre-operative Expenses </li></ul><ul><li>Capital Expenses </li></ul><ul><li>Reimbursements </li></ul><ul><li>Provisions for the Expenses </li></ul><ul><li>Not Applicable for Advance payments. </li></ul>
  30. 30. <ul><li>Thank You </li></ul>

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