Fringe_Benefit_Tax

TAXATION Fringe Benefit Tax— Concept & Compliance -Ved Jain he Hon’ble Finance Minister in the Finance Bill 2005 had proposed to levy tax in the hands of the employer in respect of the benefits being extended to the employees by such employer. The objective, as stated by the Finance Minister, is the difficulty in isolating the personal elements in respect of the benefits provided to the employees where there is a collective enjoyment of such benefits for purposes of business but includes partially the benefit of personal nature. After the introduction of the Bill many issues were raised by the trade, industry and chambers. After extensive consultations and deliberations the initial proposal put forward in the Finance Bill 2005 was modified. The salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005 are as under: T With the notification of the Finance Act, 2005, the Fringe Benefit Tax has become a law and every person falling within the definition of employer shall now be required to comply with the provisions relating to the Fringe Benefit Tax. This article provides an overview of the salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005. to pay income tax by an employer. Accordingly, all those who fall within the definition of employer shall be required to pay tax on the fringe benefits provided to the employees irrespective of the fact that income, which an employer is earning, is exempt under the Income Tax Act or there is a loss. Accordingly, those entities which are claiming exemption under Section 10 such as mutual funds, undertakings in free trade zone claiming exemption under Section 10A, export-oriented units claiming exemption under Section 10B or under Section 10BA, shall be liable to pay the Fringe Benefit Tax. The Fringe Benefit Tax is a liability of the tax of the employees to be born by the employer. That is why even loss making entities and entities whose income is exempt shall also be required to pay Fringe Benefit Tax. A. Applicability The Fringe Benefit Tax is a tax to be paid by an employer in addition to the income tax payable for every assessment year starting from the assessment year 2006-07. The tax is to be paid in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees. The liability to pay Fringe Benefit Tax shall be there even when there is no liability The author is a Central Council Member of the Institute. He can be reached at jainved@vsnl.com B. Meaning of ‘Employer’ The liability to pay Fringe Benefit Tax is on the employer. For this purpose an employer shall mean a company, a firm, an association of persons or a body of individuals, a local authority and every artificial JUNE 2005 THE CHARTERED ACCOUNTANT 1697 TAXATION juridical person. Individuals and HUFs are not required to pay Fringe Benefit Tax meaning thereby that sole proprietorship concerns shall be out of this tax net. A further exemption has been provided to the trusts or institutions which are eligible for exemption under Section 10(23C) or which are registered under Section 12AA of the Act. The trusts and institutions will be exempt from Fringe Benefit Tax till they are eligible to claim exemption under Section 10(23C) is there or there is a valid registration under Section 12AA. However, in case this registration is cancelled or approval is withdrawn, then there will be a liability to pay Fringe Benefit Tax. employees and The includes any Fringe Benefit Tax paid free or concesby employer shall not be an eligible expenditure while sional ticket computing profit or gain of business or profession, provided by despite the fact that the same has been paid on account the employer of the liability of employees. A new sub-section for private 40(a)(ic) provides that this tax journey of his shall not be deducted while employees or computing income. their family members and also any contribution by the employer to the an approved superannuation fund employfor his employees. Further, as stated in the ees or not, shall be deemed to be the beginning, the purpose of levying fringe benefit extended to the Fringe Benefit Tax on the employer employees. Accordingly, one canis the difficulty in isolating personal not claim that a particular expendielements in respect of the benefits ture has been incurred wholly and provided to the employees where exclusively for the purposes of there is a collective enjoyment of business and has not resulted into such benefits by the employees. A any benefit or amenity to the deeming provision has been intro- employee and should not be duced to provide for that in case the included in the fringe benefit. This is a presumptive tax with a employer has incurred any expendideeming fiction. First, a deeming ture or has made any payment in respect of certain purposes in the fiction has been created that the course of his business or profession expenditure incurred on the speciand for any activity irrespective of fied heads has an element of benefit whether such activity has been car- to the employees, which is deemed ried on with the object of deriving to be a fringe benefit of the income or not, a certain percentage employee and then to quantify the of such expenditure shall be element of personal nature. A predeemed to be the fringe benefit sumption has been created that out extended to the employees by the of this a specified percentage of the employer. Thus, carrying on the expenditure is the value that is of business or profession is not essen- personal benefit to the employees. tial. Even carrying on The presumptive system has been of an activity, irre- adopted to avoid disputes on the spective of the fact issue as to which expenditure is for that motive of such business purposes or which expenactivity may not be to diture is for personal purposes and derive income, will if it is of mixed nature, how much of attract liability to pay that is for business or for personal Fringe Benefit Tax. purposes. By this deeming provision a part of the D. Valuation of Fringe Benefits expenditure, irrespective of the fact The various heads of expenditure whether it has actu- and the value of each expenditure ally resulted in any which shall be deemed to be the benefit or amenity to fringe benefits are as under 1698 JUNE 2005 C. Meaning of ‘Fringe Benefits’ The liability to pay tax under this new provision is on the value of fringe benefits. As such, the first important issue is, ‘What is the meaning of fringe benefits'’ As per the provisions of the Act, fringe benefit means any consideration for employment provided by way of any privilege, service, facility or amenity directly or indirectly provided by the employer whether by way of reimbursement or otherwise to his employees, including former THE CHARTERED ACCOUNTANT TAXATION Clause of Section 115 WB(2) (A). (B). (C). (D). (E). (F). (G). (H). (I) (J). (K). (L). (M). (N). (O). (P). 115WB(1)(b) 115WB(1)(c) Percentage of the expenditure deemed to be fringe benefit Entertainment 20% Hospitality of every kind to any person 20% Conference (other than fee for participation) 20% Sales promotion, including publicity excluding advertisement 20% Employees Welfare 20% Conveyance, tour and travel, including foreign travel 20% Use of Hotel, boarding and lodging 20% Repair, running (including Fuel), maintenance of motorcars and depreciation thereon 20% Repair, Running (including fuel), maintenance of aircraft and depreciation thereon 20% Use of Telephone including mobile phone (other than leased lines) 20% Maintenance of accommodation in the nature of guest houses (Other than for training purposes) 20% Festival celebration 50% Use of health club and similar facilities 50% Use of any other club facilities 50% Gifts 50% Scholarship 50% Any Free or Concessional ticket for private journeys Actual Contribution to Superannuation fund Actual Head of Expenditure Tax at a flat rate of 30 per cent is to be paid on the aggregate value of the fringe benefit calculated by applying the above percentages. Further, surcharge at the rate of 10 per cent and education cess at the rate of 2 per cent is to be added to the tax computed above. The applicability of the surcharge and education cess is all on employer irrespective of the total income of the employer. Thus, the effective fringe benefit tax rate is 33.66 per cent. exemptions have been provided in respect of certain expenditures, which shall not be deemed to be the fringe benefits liable for taxation. i. The first and the important exception is the expenditure on food or beverages provided by the employer to his employees in office or in factory or any expenditure incurred through paid vouchers which are not transferable and usable only at eating joints or outlets. As such, expenditure incurred on providing tea, coffee, food etc in office or factory is not to be included in the fringe benefits. This exception is with reference to the expenditure incurred on employees only and accordingly the expenditure incurred in office or factory on customers, visitors, etc. cannot 1699 E. Exemptions The percentage earmarked against each head of expenditure is the value which is to be included while computing the total amount of fringe benefits on which tax is to be paid. It is to be noted that some THE CHARTERED ACCOUNTANT be excluded and shall be liable for Fringe Benefit Tax since under clause (B) provision of hospitality of every kind by the employer to any person is within the scope of fringe benefits. However, this concession of excluding expenditure incurred on employees runs contrary to the objective for levying Fringe Benefit Tax, as here one is required to pay tax in respect of the expenditure specifically incurred on persons other than employees. Further, there is no ceiling on the amount of the expenditure the employer can incur per day per employee nor the expenditure has been restricted to non-alcoholic beverages as was earlier restricted in the proviso to Rule 3(7)(iii) of Income Tax Rules, 1962. It is to be further noted that as regards exemption of expenditure incurred through paid vouchers, no condition has been imposed that these paid vouchers are to be used by the employees only. The intention to provide this concession apparently is to extend the facility to the employees to eat food outside the office, in case, the office is not able to accommodate and provide facility of eating food within its premises. However, there is no such restriction in the wording of this clause. As per language of this clause, any expenditure incurred on or payment through paid voucher is to be excluded. Further, there is no ceiling on the amount of the expenditure which one can incur either per day or per employee as were provided in the proviso to Rule 3(7)(iii) of Rs.50 per meal. Presently, one may give a paid voucher of any amount even to a customer, but with a condition JUNE 2005 TAXATION that such person himself uses the same at an eating joint or outlet. ii. In respect of expenditure incurred on conference, the fee for participation by the employees in the conference shall not be included in the fringe benefits. However, expenditure on conveyance, tour, travel on hotel incurred in connection with any conference shall be included in the value of the fringe benefits. iii.Expenditure incurred on advertisement is not to be included in the value of fringe benefits. The type of the expenditure on advertisement which is not to be included has been specifically provided. Expenditure on advertisement in print media, electronic media, transport systems, holding of or participation in a press conference, business convention, fair or exhibition, publication of any notice, and by way of signs, artwork, painting, banner, direct mail, kiosk, hoardings shall be excluded from the value of the fringe benefit. However, expenditure on sponsorship of any sports event or any other event shall be excluded only when the event is organized by any government agency or trade association or body. This will mean that in case the event is organized by the employer himself, then the expenditure incurred on such event shall be included in the value of fringe benefits. Payment made to advertising agency for any of the purposes stated above shall also be out of the purview of the Fringe Benefit. iv. Any expenditure incurred on payment made to fulfil any statutory obligation with regard to the employees shall not form part of the fringe benefits and, as such, is not to be included in the THE CHARTERED ACCOUNTANT amount of expenditure incurred on employees welfare. Thus, the contribution made by the employer to the Provident Fund, ESIC, etc. shall not be liable for Fringe Benefit Tax. It may be further noted that contribution to the approved superannuation fund is to be included in the value of fringe benefits and the valuation of the same shall be at 100 per cent of the value. The reason being that contribution to approved superannuation fund is not any statutory obligation. It is a voluntary payment made by the employer to the superannuation fund and the same is not liable for taxation in the hands of the employee and fully deductible expenditure in the hands of the employer. However, contribution to the approved gratuity fund shall not be liable for Fringe Benefit Tax as the same is a statutory obligation of the employer. F. Employer Specific Concessions In addition to the above general exemptions, certain employer-specific concessions have also been provided. In the case of an employer who is engaged in the business of hotel, the value of fringe benefits liable for tax in respect of provision of hospitality (clause B) shall be 5 per cent (as against the general rate of 20 per cent) of the total amount of expenditure incurred on hospitality. In the case of the employer who is engaged in the business of construction, the value of the fringe benefits in respect of the expenditure incurred on conveyance, tour and travel including foreign travel (clause F) shall be 5 per cent instead of 20 per cent. In the case of 1700 employer engaged in the business of carriage of passengers or goods by motorcars, the value of the fringe benefits in respect of the expenditure incurred on repair, running and maintenance of motorcar, including depreciation (clause H) shall be 5 per cent instead of 20 per cent. In the case of an employer engaged in carriage of passenger or goods by aircraft, the value of fringe benefit in respect of expenditure on repair, running, maintenance including depreciation of aircraft shall be taken as nil instead of 20 per cent. Further, in the case of an employer engaged in the business of manufacture or production of pharmaceuticals, and computer software, the value of fringe benefits liable for tax in respect of expenditure incurred on conveyance, tour and travel including foreign travel (clause F) and use of hotel, boarding and lodging facility (clause G), shall be 5 per cent (as against the general rate of 20 per cent) of the expenditure incurred under these heads. Scope of ‘computer software’ has not been specified in this section. However, as per Explanation 2 to Section 10A and Explanation (b) to Section 80HHE, ‘computer software’ means any computer program recorded on any disk, tape, perforated media or other information storage device or any customised electronic data, or any product or service of similar nature as may be notified by the board. The board has notified the list of information technology enabled products vide notification no. SO 890(E) dated 26th of September 2000 which includes call centres, data processing, medical transcription, back office operations within the meaning of computer software. However, it may be noted that the meaning of the computer software stated above in JUNE 2005 TAXATION Explanation 2 is for the purposes of Section 10A only and in Explanation (b) is for the purposes of Section 80HHE only. or ‘Establishment Expense’, so that the same does not get clubbed with the other expenditure which is liable for Fringe Benefit Tax. Expenditure on maintenance of guesthouse being used for training purposes need to be classified separately from the expenditure incurred on maintenance of guesthouse as such. auditor shall be required to specify the amount of fringe benefit tax debited in the profit and loss account under clause 16(f) of Form 3CD of the tax audit report from assessment year 2006-07 onwards. Compliance of Fringe Benefit Provisions ◆ G. Need For Reclassification of Expenditure Heads With the introduction of Fringe Benefit Tax from 1st April, 2005, there is a need to revise the expenditure heads so that the expenditure not liable for fringe benefit do not get merged with the expenditure liable for Fringe Benefit Tax. Some of the heads where this regrouping will be required are as under. i. Hospitality provided to the employees by way of food and beverage in office or factory or by way of paid vouchers need to be debited under a separate head other than the employee welfare / staff welfare expenditure. ii. Expenditure on repair, running and maintenance of motor car and depreciation thereon need to be classified separately from the expenditure incurred on repair, running of vehicles other than motor cars such as scooter, bus, truck, etc. iii. Expenditure on conference fee for participation of employees needs to be classified separately in view of exemption in clause (C). iv. Expenditure, which is taxable as perquisite in the hands of employees, is not liable for Fringe Benefit Tax. As such all such expenditure need to be debited under the head ‘Salary’ H.Fringe Benefit Tax is not a deductible expenditure The fringe benefit tax paid by the employer shall not be an eligible expenditure while computing profit or gain of business or profession, despite the fact, that the same has been paid on account of the liability of the employees. A new subsection 40(a)(ic) has been inserted to provide that the Fringe Benefit Tax shall not be deducted while computing income. The reason for this is that this tax despite being an obligation of the employee is borne by the employer and still it is not added as fringe benefit while computing the liability of the Fringe Benefit Tax. Thus, the tax is not being compounded of. In the alternative option, the tax could have been compounded of and full deduction of the tax would have been allowed while computing business income. Under both the alternatives, the total tax liability is same for a tax paying entity. However, in the alternative option, the liability of the tax-exempt and loss-making entities would have been much higher. Further, tax Payment of tax in advance: The Fringe Benefit Tax is applicable from financial year beginning on 1st April 2005, i.e., assessment year 2006-07. For complying with the fringe benefit provisions, every employer shall be required to compute the value of the fringe benefits, every quarter. It is to be noted that there is a liability to pay Fringe Benefit Tax by way of advance tax every quarter, not on the basis of yearly estimate, but on the basis of the actual value of fringe benefits computed every quarter. Further, there is no threshold limit for the liability to pay Fringe Benefit Tax in advance every quarter as is the case under Section 208 of the Act in the case of regular income tax is to be paid only when the same is Rs. 5000 or more. This may cause genuine hardship to those entities, which will be required to pay small or nominal amount of Fringe Benefit Tax and will also cause administrative problem to the collecting bank as well as tax administration. In view of this requirement to pay advance tax on actual basis, every employer shall be required to compute the actual A new clause (d) is being added to Section 271(1) for levying penalty in case there is a concealment of the particulars of fringe benefit or inaccurate particulars are furnished. The penalty for late filing of FBT return shall be Rs. 100 per day for each day of default starting from the due date of return as against penalty of Rs. 5000 leviable for late filing of return of regular income. THE CHARTERED ACCOUNTANT 1701 JUNE 2005 TAXATION amount of the fringe benefit liable for tax. The immediate requirement will be to compute the same for the first quarter starting from 1st April 2005 to 30th June 2005 of the current year and pay the tax thereon at the rate of 33.66 per cent (inclusive of surcharge and education cess) by 15th July 2005. Similar liability is to be computed and paid for the subsequent quarters by 15th October and 15th January. However, for the quarter ending on 31st March, the fringe benefit tax is to be paid even before the end of the quarter, i.e., by 15th March. In case of failure to pay the tax for any quarter, or where the tax paid is less, then there shall be a liability to pay interest at the rate of 1 per cent on the amount of the short-fall for every month or part of the month till the short-fall continues. The liability to pay interest under the Fringe Benefit Tax is on monthly basis and shall continue till the date it is actually paid. The provision of interest liability in case of default or delay in payment of fringe benefit tax in advance are on the line of section 234B and 234C of the act with exception that these two have been merged by providing that interest is to be paid from the date of the default till actual payment. (There is no breaking of the period up to 31st March and the period thereafter). Further, in case of default in any quarter, interest is to be computed on monthly basis as against quarterly basis under Section 234C of the Act. The liability to pay interest in case of shortfall of tax is on actual amount of the tax payable THE CHARTERED ACCOUNTANT without any concession Every employer who has provided on account of estimation the fringe benefits to his employas is the case under Section 234B and Section ees is required to file return of 234C of the Act where fringe benefits irrespective of interest is payable only whether such employer is when the advance tax paid required to file return of his own is less than 90 per cent of income under Section 139 of the the actual tax liability. This may cause practical Act or not. The due date of filing st difficulties particularly return shall be 31 October for a for the last quarter where company and a person whose the tax is to be deposited accounts are required to be by 15th March, i.e., 16 audited. days even before the quarter ends. Further, in the case of entities such as In case of delay in filing the banks having a large number of return, interest at the rate of 1 per branches, it may practically be cent for each month of default is difficult to compile information to be paid on the amount of of all the branches within a fringe benefit tax as reduced by period of 15 days from the end of the advance tax paid. The first the quarter and that too after return shall be for assessment making the provision of the year 2006-07 and shall fall due expenditure incurred on accrual either on 31st July, 2006 or 31st basis. October, 2006 as the case maybe. The return form has not ◆ Filing of Return: Every been notified yet. The return employer who has provided the though legally required to be an fringe benefits, as explained independent return, the same above, to his employees is may be in the form of a declararequired to file return of fringe tion with certificate from tax benefits irrespective of the fact auditor, giving computation of whether such employer is the value of the fringe benefit required to file the return of his under each head of the expendiown income under Section 139 ture liable for fringe benefit tax. of the Act or not. The due date of Considering the requirement of filing the return shall be 31st paying advance tax on actual October for a company and a amount of fringe benefit, the person whose accounts are information required in the required to be audited. In other return form and certification cases, the due date shall be 31st thereof will be required to be July every year. It has been furgiven on quarterly basis. ther provided that where return is not filed the Assessing Officer ◆ Assessment: The procedure of shall have the right to ask the the assessment including the employer to file the return. best judgement assessment and Further, an employer can file a reassessment shall be the same revised return in case he discovas is applicable in the case of the ers any omission or wrong stateregular assessment of the ment in the return already filed. income. These provisions are 1702 JUNE 2005 TAXATION exactly on the lines of Section 143, 144, 147 and 148 of the Act including refund of the excess tax paid. Despite the return being a separate return, it appears that there will be no separate scrutiny of FBT returns. The Finance Minister in the Parliament at the time of the passage of the Finance Bill 2005, has stated: “What we are doing is eliminating the entire discretion. What we are asking him is to file a tax audit certificate saying according to his auditor these are the expenditure under the various heads. If the tax audit certifies these are heads, the officer has no discretion. The Income Tax Officer has to accept that audit certificate unless it turns out to be a patently false certificate. We will accept that certificate of the auditor”. ◆ default starting from the due date of return as against penalty of Rs. 5000 leviable for late filing of return of regular income and that too when return is not filed before the end of the assessment year. Perquisite versus Fringe Benefit Penalty for concealment: A new clause (d) is being added to Section 271(1) for levying penalty, in case there is a concealment of the particulars of the fringe benefit or inaccurate particulars are furnished about such fringe benefit. The penalty is on the same line as is for concealment of income and the minimum penalty shall not be less than the amount of the tax sought to be evaded and maximum penalty can be three times of the amount sought to be evaded. Penalty for late filing of return: The penalty provisions for late filing of FBT return are more stringent as compared to late filing of return of regular income. The penalty for late filing of FBT return shall be Rs. 100 per day for each day of ◆ With the shifting of the tax liability on employer from employees in respect of certain fringe benefits, these fringe benefits that were hitherto taxable in the hands of the employees as perquisites, will no longer be taxable in the hands of the employees. For this, Rules for valuation of perquisites have been amended vide notification no. 68/2005 dated 28th February, 2005, whereby Rule 2 relating to valua- In case of failure to pay the tax for any tion of motor car quarter, or where the tax paid is less, perquisite, Rule 3(6) there shall be a liability to pay interest relating to free or con- at the rate of 1% on the amount of the cessional journey given shortfall for every month or part of the to transport employees, Rule 3(7)(ii) to 3(7)(vi) month till short-fall continues. Liability relating to value of trav- to pay interest under the Fringe Benefit elling, free meals, gift, Tax is on monthly basis and shall concredit cards, club facility tinue till the date it is actually paid. and Rule 3(8) relating to valuation of any other benefit and exempting expenses on 17(2) of the Act. Thus, there is no telephones having withdrawn. scope of double taxation. Further, clause (vi) of Section 17(2) House rent allowance, rent has been amended to provide that free accommodation, transport only those fringe benefit and allowance, leave travel concession, amenity shall be included in the perquisite on account of reimburseperquisite of the employees, which ment of medical expenses (in view are not chargeable to tax under of proviso to Section 17(2)), interfringe benefit tax. The meaning of est-free or concessional loan, supthis will be that those benefit or ply of gas, electric energy or water amenity, on which tax is payable by for household consumption, use of the employer as fringe benefit tax, mobile assets and transfer of movwill not be included in the income able assets shall not be liable for of the employees. Similarly, sub Fringe Benefit Tax and shall be section (3) of Section 115WB has considered as perquisite in the been inserted in the chapter on the hands of the employee only of Fringe Benefit Tax to provide that course after considering exemption 1703 JUNE 2005 privilege, service, facility or amenity does not include perquisite in respect of which tax is paid or payable by the employee. Thus, any perquisite given to the employee is to be included in the income of the employee in view of the provisions of the Section 17(2), the same is not liable for any fringe benefit tax. Thus, there exists mutual exclusion between the two. What is taxable in the hands of employee cannot be taxed as fringe benefits in the hands of the employer in view of Section 115WB(3) and what is taxable as fringe benefit in the hands of employer cannot be taxed in the hands of employees in view of amended clause (vi) of Section THE CHARTERED ACCOUNTANT TAXATION in respect of such perquisite, if, any available under the Act. However, facility or amenity extended to the employees by way of motor car, free meal, gift, credit card, club facility, telephone is not to be included in the hands of the employees as perquisites as these are now to be taxed as fringe benefits in the hands of the employer. The new Fringe Benefit Tax in a way has given an additional increment to the employees as their liability to pay tax in case they are enjoying facility or amenity by way of motor car, etc, will get reduced by the amount of tax which would otherwise have been payable every month by way of deduction of tax at source. expenses is allowable. Thus, expenditure incurred by any employer, which is of personal nature, will not be allowable expenditure even after payment of not be any disallowance under Section 37(1) in respect of expenditure incurred on the employee. However, where there is no employer-employee relationship, such as expenditure incurred on partners or non-employee directors, if the expenditure incurred is of personal nature and not for business purposes, the same will not be eligible for deduction under Section 37(1) of the Act and consequently, there will not be any liability to pay fringe benefit tax on such expenditure as the expenditure has not been incurred in the course of business or profession. However, where the expenditure incurred for partners or non-employee directors is relatable to business and there may be some element of personal nature in such expenditure, such as use of motor cars, etc, the same need not be disallowed now as the same is liable for fringe benefit tax by capturing the personal element of such expenditure as otherwise it may lead to double taxation. Fringe Benefit Tax is a new law. As is the case with any new law, many issues will arise on its interpretation and application. One can only hope that all such issues get sorted out and clarified at the ■ earliest. Business Expenditure versus Fringe Benefit An important issue after levy of Fringe Benefit Tax is the disallowance of the expenditure incurred under Section 37(1) on account of personal use in view of the fact that the provision of Sec 37(1) has not been amended to provide any exclusion. As per provision of Section 37(1), expenditure incurred wholly and exclusively for the purposes of business or profession not being in the nature of capital expenditure or personal With the introduction of Fringe Benefit Tax, the expenditure heads need to be revised so that the expenditure not liable for fringe benefit do not get merged with expenditure liable for this Tax. For example, hospitality provided to employees by way of food and beverage in office or factory or by way of paid vouchers need to be debited under a separate head other than the employee welfare/staff welfare expenditure. Fringe Benefit Tax. It may be clarified that expenditure incurred on employees, i.e., where the relationship is that of employer-employee, is not considered to be personal in nature as any payment or expenditure incurred on employee is in consideration of services provided by the employee and as such is for business purposes. Thus, there can- INVITATION FOR CONTRIBUTING ARTICLES FOR COMING ISSUES We have decided to bring out the July 2005 issue of The Chartered Accountant as special issue on the theme ‘Accountancy Profession in Global Perspective’ to mark the 56th Chartered Accountants Day (July 1, 2005). The professionals are invited to contribute articles on the theme from both national and international angles. The articles should not exceed 4,000 words each. Every article should have an Executive Summary of about 100/150 words, author’s e-mail ID, postal address and contact numbers along with a passport size photograph. Theme for other future issues are: August – Service Tax September – SMPs and SMEs The articles for the July 2005 special issue should reach us by June 9, 2005 while the write-ups for August 2005 issue should reach us by July 9, 2005. The articles can be sent to us by e-mail at nadeem@icai.org / ebsecretariat@icai.org or by post (two manuscripts along with a soft copy of article, e-mail Id and passport size photograph) to The Editor, The Chartered Accountant, Journal Section, ICAI, PO Box 7100, New Delhi - 110002 The contributors may go through the ‘Guidelines for Authors of The Chartered Accountant Journal’ hosted on the website of the Institute at the link http://www.icai.org/announ/guidelinesauthors.html for reference. THE CHARTERED ACCOUNTANT 1704 JUNE 2005