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HOTEL & BOARDING EXP ON TOUR IS TAKEN IN TRAVELLING EXP FOR FBT OR NOT

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)

17 November 2007

Whether foreign currency taken for the purpose for foreign tour & travelling expense is to be included in Tour & travelling expenses i.e Value of FBT will be taken 5% or not.

I.e in case of travelling expenses, only tickets amount is considered for Tour & Travelling expense for the purpose of value of FBT, other hotel, boarding & lodging expenses is to be taken in tour & travelling expense or not.

Please help asap.

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5 Replies

GARGS (CA) (74 Points)
Replied 17 November 2007

As per section 115WB use of boarding and lodging is included in FBT and valued similarly. Thanks, taxsolution @ againstthelaw.co.in

ASHISH YADAV (Chartered Accountant) (119 Points)
Replied 17 November 2007

hi dear only ticket and taxi expenses will go to the travelling expenses and taxed at 5% as tours and travels. cost of hotel and foodind will go to the hotel,lodging and boarding @ 20%. but practaically there is no clear defination in incometax for diffrenciate such amount, so u can take it as tour expenses @ 5 %. in case of doubt the benifit will go to the assesee. i think u have understan clearly

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 20 November 2007

I agree with Ashish. However, the matter need some authentic clarification. Normally, entire expenses incurred in a tour is debited to tour &/ travelling expenses A/c. If separate headwise FBT is applicable on expenses incurred in tour, we should advise our clients and accountants to make the entries accordingly. The question is, whether this was the intention behind the Act?

GARGS (CA) (74 Points)
Replied 20 November 2007

Value of Fringe Benefits depends upon the kind of business the employer is carrying on.

According to sec 115WB(2)(G) use of hotel, boarding and lodging facilities is included in fringe benefits. And for value of those benefits you must see that what kind of business employer is carrying on and should refer to sec115WC(2).

In general it is 20% of the expenses (if employer is not carrying on the specified businesses) for hotel boarding and lodging facilities,
And it is 5% for tour and travel cost(i.e. the tickets)

Thanks,
taxsolution @ againstthelaw.co.in