Mithai

 

 

One Company named X co ...  deducts .5% from payments made to vendors as Mithai to be distributed to its employees as Mithai in terms of rupees  not exceeding Rs. 5000 per employee in a year.
Mithai is not shown in Form 16 , so it is not taxable on employees hands.
But X co squares of its A/c of Mithai collected from vendors by distributing to its employees .... 
Now my question is whether X co is liable for FBT on Mithai ?? If  yes under which section .. Please give if any case . If X co is not liable to FBT then whether Vendors are Liable to FBT ?? Please Help ......
 
 
 
Replies (10)

can u b a little clear

 

Company is liable

> Thanks ....

 

Can u explain me this act in details...??

ONE THING IS CLEAR THAT THE COMPANY IS AVAILING DISCOUNT FROM THE VENDERS AND DISTRIBUTING THE SAME TO ITS EMPLOYEES IN THE FORM OF MITHAI.  HAD IT NOT DISBURSED TO ITS EMPLOYEES, THE SAME SHOULD HAVE GONE TO THE PROFIT AND LOSS ACCOUNT OF THE COMPANY.  THUS IT IS DISTRIBUTED OUT OF THE PROFITS BY VIRTUE OF EMPLOYER-EMPLOYEE RELATIONS IN THE FORM OF MITHAI WHICH IS SUFFICIENT TO BRING IT IN THE AMBIT OF FBT.  THUS THE COMPANY IS LIABLE FOR FBT AS THE SAME IS NOT INCLUDED IN FORM 16

Gurdip Sir,

Please let me know under which criteria it will be taxable.

Priyanka ji,

You are saying that it is to be distributed to its employees. But I want to know, what is the actual position. Is it actually distributed or not?

Please clarify.

yes it is paid in cash to employees by closing mithai account...

Then it is chargeable to FBT under Entertainment Expenses.

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