18 September 2008
TNG is a Company and one of its businesses is conducting training sessions to new recruits for another company BFSI. As part of services offered, TNG arranges for lodging and boarding facilities for BFSI’s new recruits, as most of them are outstation candidates . TNG also provides for their local conveyance when they are commuting from Hotel to Training venue. TNG does not get any separate reimbursement of the expenses from BFSI as TNG has to pay as per terms of Contract. Can any one kindly clarify the below.
1) TNG proposes to charge the lodging and boarding expenses, Conveyance charges to either “ PROJECTEXPENSES” or ‘TRAINING EXPENSES” in TNG’s books of account as the recruits are not its own employees but those of its client BFSI. This also enables TNG to avoid Fringe benefit tax. Is this OK? 2) In this connection will BFSI ‘s FBT liability be nil as the expenditure is incurred by TNG. 3) Will the Department insist on either of TNG or BFSI paying FBT as BFSI’ Employees traveling and Lodging/Boarding is involved. 4)The whole idea is to avoid paying FBT
TNG is not liable for FBT because of these expenses are incurred as operation expenses. TNG paid such expenses on behalf of customer. And TNG recover such expenses from customer. So these expenses are not covered under FBT.
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