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FBT on employee transportation

bhanuprasad (SR EXECUTIVE OFFICER) (49 Points)

20 February 2009

A company provided Motor cars for transportation of their employees from residence to office will it attracks FBT

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5 Replies

CA jayalakshmi (Associate consultant) (235 Points)
Replied 20 February 2009

Any benefit in the nature of free or subsidised transport or any allowance provided by the employer to his employees for journey from the employee's residence to the place of work or such place of work to residence will not attract FBT.

jitendra goswami (accountant) (76 Points)
Replied 20 February 2009

The Finance Act,2006 has amended section 115WB(3) with effect from assessment year 2007-08 to claify that:-

Free or subsidised transport provided to employees for journeys from their residence to the place of work or such place of work to the place of residence will will not attract FBT irrespective of whether such facility is in lieu of transport allowance or not.

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 20 February 2009

It is in lieu of conveyance/transportation allowance to employee, which is not liable for FBT. (Clarified in FAQ 104 of Circular No.8/2005 dt.29-08-2005)

M.Sriram Shenoy (CA Final) (814 Points)
Replied 26 February 2009

Jayalakshmi and Jitendra goswami are absolutely right. Providing Transportation facility to employees from their place to the place of work and fro will NOT ATTRACT FBT in the hands of the company.

gokul (Accountant) (126 Points)
Replied 16 March 2009

If Iam allowed to add to the above question, please clarify

If motor car is given exclusively for the employee, mainly for conveyance between home and office. The vehicle is hired from a cab operator and the company pays the operator based on the log book. The employee is also allowed to use the vehicle for his personal purpose during holidays(which is not on a regular basis).

Will this kind of an arrangement attract FBT for the whole amount charged by the operator including the charges relating to conveyance between home and office.

If yes - then whether maintaining a seperate log book and raising seperate bill, for employees private usage would help to bring down the FBT liability.

Thanks