FBT on Event management costs

Others 1426 views 3 replies

Rrchandran

16 Points Posted on 10 May 2007

Dear Friends

I work for a media company (magazines). We hold branded events which are sponsored by various companies. We incur costs such as cost of venue (typically a 5 star hotel), room rentals, food and beverages,equipment hire, travel tickets for invitees and staff etc.,. Example the Economic Times awards.

I would like to understand whether such expenses are subject to FBT ?

We are not a government agency, trade association or body as per 115WB(2)(D) clause iii.

I would think the expenses are not expenses on conference or seminars as we are not attending but hosting the same.
Will it be considered as entertainment ?

Thanks in advance for your views and thoughts.

RRchandran

Replies (3)

CA.Sachin Bajaj

Chartered Accountant

138 Points Posted on 10 May 2007

Well in my opinion the expenses mentioned above are infact in the nature of conference
as mentioned u\s115WB(2)(C) as per the the explaination given to the section .

It is a deemed Fringe Benefit without having regard to on whose behalf u r holding a conferrence .However had the invoices for goods & services been issued in the name of the company the liabilty of FBT would have shifted to the co.
And it will not be treated as F.B u/s115WB(2)(A) as there is a specific sec. for Conference.

Correct me if i am wrong. 8) 8) 8) 8) 8) 8)

Rrchandran

16 Points Posted on 10 May 2007

Thanks for your response.

I did check this up there after. Taxmanns Guide to FBT suggests that these may be treated as Business Conventions and exempted under 115WB (2)(D) clause iii.

A 'Convention' is a formal meeting of members,representatives or delegates as of a political party,fraternal society,profession or industry. So a business convention is a formal meeting of members, representatives or delegates of a profession or industry.
(extracts from Taxmans Guide to FBT 3rd Edition 2006).

I am in the business of Media & Events Management and it seems rather unresonable that all my expenses (80%) are considered fringe benefits !!

FYI the bills are raised in our name.