FREE TRANSPORATION NOT IN LIEU OF TRANSPORTATION ALLOWANCE
This query is : Resolved
15 May 2009
SIR,
PLEASE EXPLAIN IF FREE CONVEYANCE FACILITY PROVIDED BY THE EMPLOYER TO EMPLOYEE BUT NOT IN LIEU OF CONVEYANCE ALLOWANCE IS LIABILE TO FBT OR NOT.
AS PER CIRCULAR NO 8/2005, FAQ NO. 104, FREE TRANSPORATION IN LIEU OF TRANSPORTATION ALLOWANCE IS NOT LIABLE TO FBT.
PLEASE EXPLAIN IF FREE CONVEYANCE FACILITY PROVIDED BY THE EMPLOYER TO EMPLOYEE BUT NOT IN LIEU OF CONVEYANCE ALLOWANCE IS LIABILE TO FBT OR NOT.
AS PER CIRCULAR NO 8/2005, FAQ NO. 104, FREE TRANSPORATION IN LIEU OF TRANSPORTATION ALLOWANCE IS NOT LIABLE TO FBT.
16 May 2009
reply soon
25 July 2024
The query relates to whether providing free conveyance (transportation) to employees, without it being in lieu of a conveyance allowance, is liable for Fringe Benefit Tax (FBT). Here's an explanation based on the provisions and circular mentioned:
### Understanding Free Conveyance in Relation to FBT
1. **Fringe Benefit Tax (FBT):**
- FBT was a tax levied on certain benefits provided by employers to their employees in addition to salary. It was applicable under the Income Tax Act, 1961, but it was abolished effective April 1, 2009. Therefore, FBT is no longer applicable.
2. **Circular No. 8/2005 and FAQ No. 104:**
- Circular No. 8/2005 issued by the Central Board of Direct Taxes (CBDT) and FAQ No. 104 provide guidance on various aspects of FBT.
- According to the FAQ No. 104 under Circular No. 8/2005, free transportation provided by an employer to an employee in lieu of transportation allowance was not liable for FBT.
3. **Free Conveyance not in lieu of Conveyance Allowance:**
- If an employer provides free conveyance to an employee but it is not given in lieu of a conveyance allowance (meaning the employee does not forfeit a part of their salary or allowance in exchange for free conveyance), the situation differs.
- In such cases, historically, there might not have been a specific provision under FBT since FBT typically applied to benefits provided in addition to salary and not necessarily as standalone benefits like free conveyance without being in lieu of an allowance.
4. **Current Scenario:**
- As FBT has been abolished since April 1, 2009, the specific concerns related to FBT are no longer applicable.
- Instead, the current tax implications related to any benefits provided by employers to employees would generally fall under the ambit of perquisites or other income tax provisions, depending on the nature of the benefit provided.
### Conclusion:
Since FBT is no longer applicable post-April 1, 2009, the concept of whether free conveyance is in lieu of conveyance allowance for the purpose of FBT is moot. However, employers should still ensure compliance with current income tax provisions regarding perquisites and benefits provided to employees, which may include reporting such benefits appropriately in employee tax statements and complying with any applicable regulations.
For precise advice tailored to your specific circumstances and current tax laws, consulting with a tax advisor or chartered accountant would be advisable. They can provide guidance on how to handle benefits like free conveyance in compliance with current tax regulations applicable to employers and employees.
### Understanding Free Conveyance in Relation to FBT
1. **Fringe Benefit Tax (FBT):**
- FBT was a tax levied on certain benefits provided by employers to their employees in addition to salary. It was applicable under the Income Tax Act, 1961, but it was abolished effective April 1, 2009. Therefore, FBT is no longer applicable.
2. **Circular No. 8/2005 and FAQ No. 104:**
- Circular No. 8/2005 issued by the Central Board of Direct Taxes (CBDT) and FAQ No. 104 provide guidance on various aspects of FBT.
- According to the FAQ No. 104 under Circular No. 8/2005, free transportation provided by an employer to an employee in lieu of transportation allowance was not liable for FBT.
3. **Free Conveyance not in lieu of Conveyance Allowance:**
- If an employer provides free conveyance to an employee but it is not given in lieu of a conveyance allowance (meaning the employee does not forfeit a part of their salary or allowance in exchange for free conveyance), the situation differs.
- In such cases, historically, there might not have been a specific provision under FBT since FBT typically applied to benefits provided in addition to salary and not necessarily as standalone benefits like free conveyance without being in lieu of an allowance.
4. **Current Scenario:**
- As FBT has been abolished since April 1, 2009, the specific concerns related to FBT are no longer applicable.
- Instead, the current tax implications related to any benefits provided by employers to employees would generally fall under the ambit of perquisites or other income tax provisions, depending on the nature of the benefit provided.
### Conclusion:
Since FBT is no longer applicable post-April 1, 2009, the concept of whether free conveyance is in lieu of conveyance allowance for the purpose of FBT is moot. However, employers should still ensure compliance with current income tax provisions regarding perquisites and benefits provided to employees, which may include reporting such benefits appropriately in employee tax statements and complying with any applicable regulations.
For precise advice tailored to your specific circumstances and current tax laws, consulting with a tax advisor or chartered accountant would be advisable. They can provide guidance on how to handle benefits like free conveyance in compliance with current tax regulations applicable to employers and employees.
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