Tax treatment of club membership paid by a ltd. co.

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This query is : Resolved

Nihar (Querist)

13 January 2016 Sir,

One Co. Pays Club Membership Fees on behalf of One of His Employee.

What are the tax implications for the same. (If Receipt is in the Name of Company)

In The Hands of The Company

In The Hands of The Employee

What are the tax implications for the same. (If Receipt is in the Name of Employee)

In The Hands of The Company

In The Hands of The Employee

Please give your reply as soon as possible.

One thing which is known to me is that The Same Requires Disclosure in Tax Audit Report under clause 21 (a).

Regards.

Nihar.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 January 2016 For the employee, the company pays club member fee. If it is not for the purpose of business or is paid purely on behalf of the employee then the same can be treated as income of the employee under the head Income from Salaries. The company may debit the same to his salary account in stead of debiting it to Membership like a/c.
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If the company can prove that the membership has been paid under a strict business consideration and it is meant exclusively for the purpose of business it can debit it to Membership like account. In such a case , name on the receipt does not have much impact as the same can be so, according to the rules and regulations of the club also. If its a like case, there will be no impact of taxation on the employee.
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