Chartered Accountant
1575 Points
Joined December 2008
There are two approaches:
Conservative: Since FBT is charged on deemed basis on 20% of the entire value of fringe benefit, it implies that the law assumes 20% of the entire expenditure as pertaining to employees. Accordingly, the travel bills submitted by your contractor will be added to other travelling expenses and 20% of the whole shall be deemed to be the value of benefit provided to the employees. In such case, the opinion of your CA is right.
Aggresive: the basis of levy of FBT is to bring to charge benefits provided to employees as such.Since the contractor is not an employee, we can always defend that it does not attract FBT. But, if you follow this approach, you must be ready for litigation
You need to make a cost benefit analysis and select any of the aforesaid approaches