FBT ON FREE TRANSPORTATION facility

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CA-ASPIRANT (Querist)
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16 May 2009 Is company liable to pay FBT on free transportation facility provided to employee which is not in lieu of conveyance allowance

(i.e, conveyance allowance is also being given to employess and buses have also hired for commuting from residence to office and office to residence.)

AS per Circular No. 8/2005 dt 29/08/2005
FAQ NO. 104, facility provided in lieu of conveyance allowance is not liable to FBT.

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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16 May 2009 Free transportation provided by the employer for the purpose of commuting between the place of employment and the resident is not taxable.

taxindiaconnect

taxindiaconnect (Expert)
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16 May 2009 Reply to your query lies in the following clarification provided by CBDT in circular no No. 8 dated 29 August 2005 at question no 104 -

Whether expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence would attract FBT?
The free or subsidized transport provided to employees for journeys from their residence to the place of work or such place of work to the place of residence is in lieu of conveyance/transportation allowance, which is not liable to FBT. Accordingly, the expenditure incurred by the employer for the purposes of providing free or subsidized transport for journeys to employees from their residence to the place of work or such place of work to the place of residence will not be liable to FBT.

Thus the free transport limited only to transportation from residence of office and back is not liable to FBT. For any other free transportation facility is covered under FBT

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