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22. Amendment of section 115WB. |
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—In section 115WB of the Income-tax Act,—
(a) in sub-section (1), in the Explanation to clause (d), in clause (i), for the words "and includes employees’ stock option", the words "and, where employees’ stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme" shall be substituted;
(b) in sub-section (2), with effect from the 1st day of April, 2009,—
(I) in clause (B), after sub-clause (ii), the following sub-clause shall be inserted, namely:—
"(iii) any expenditure on or payment through non-transferable pre-paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed;";
(II) in clause (E), for the Explanation, the following Explanation shall be substituted, namely:—
"Explanation.—For the purposes of this clause, any expenditure incurred or payment made to—
(i) fulfil any statutory obligation; or
(ii) mitigate occupational hazards; or
(iii) provide first aid facilities in the hospital or dispensary run by the employer; or
(iv) provide creche facility for the children of the employee; or
(v) sponsor a sportsman, being an employee; or
(vi) organise sports events for employees,
shall not be considered as expenditure for employees’ welfare;";
(III) clause (K) shall be omitted.
Clause 22 seeks to amend section 115WB of the Income-tax Act, which relates to fringe benefits.
In the said section, the expression "specified security" has been defined, which, inter alia, includes employees’ stock option. It is proposed to amend this definition so as to include securities offered under an employees’ stock option plan or scheme, where the employees’ stock option has been granted.
This amendment will take effect from 1st April, 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years.
Sub-section (2) of the said section provides that the fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income, profits or gains), incurred any expense on or made any payment for the specified purposes such as entertainment, hospitality, conference, sales promotion (including publicity), etc.
Sub-clauses (i) and (ii) of clause (B) of the said sub-section exclude certain expenditure from the hospitality expenditure for calculation of fringe benefit tax. It is proposed to amend clause (B) to further provide that any expenditure on or payment through non-transferable pre-paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed, shall also be excluded from the hospitality expenditure for calculation of fringe benefit tax.
Further, the Explanation to clause (E) of the said sub-section excludes certain expenses from the employees’ welfare expenses for calculation of fringe benefit tax. It is proposed to enlarge the scope of the exclusion in this Explanation by providing that the expenditure incurred or payment made to—
(i) provide creche facility for the children of the employee ; or
(ii) sponsor a sportsman, being an employee ; or
(iii) organise sports events for employees,
shall also be not considered as expenditure on employees’ welfare for calculation of fringe benefit tax.
Further, clause (K) of the said sub-section provides for expenditure on maintenance of any accommodation in the nature of guest house, other than accommodation used for training purposes, as fringe benefit. It is proposed to omit this clause so as not to subject this expenditure to fringe benefit tax.
These amendments will take effect from 1st April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years.
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