Whether expenditure on meeting of employees and their families on the occasion of a festival like Navratri would be expenditure on festival or expenditure on employee welfare?
Expenditure on meeting/ get-togethers of employees and their family members on the occasion of any festival like Navratri’, ‘Diwali’ Id’, ‘Christmas’ or New Year’ is expenditure on festival celebrations. Such expenditure would, therefore, fall within the scope of clause (L) of sub -section (2) of section 115WB. Expenditure on meeting/get-togethers of employees and their families on non festival occasions (including annual day), may be classified as expenditure on entertainment within the meaning of clause (A) of sub-section (2) of section 115WB or as expenditure on employees’ welfare within the meaning of clause (E) of sub -section (2) of section 115WB of the Income-tax Act. Such expenditure is liable to FBT. However, expenditure on celebration of Independence Day and Republic Day will not be liable to FBT because they are not ‘festivals’ as normally understood.
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