Expenditure on food or beverages provided to the employees by an employer--Section 37(2) of the Income-tax Act, 1961--Clarification

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..... me-tax Act, 1961, as it is substituted with effect from April 1, 1993, places restrictions on the quantum of deduction permissible on account of entertainment expenditure. The expression "entertainment expenditure" has been defined to include, inter alia, expenditure on provision of hospitality of every kind by the assessee to any person whether by way of provision of food or beverages or in any o .....

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..... ion of food or beverages in places other than the place of work in respect of the low-paid employees can be treated as expenditure on provision of hospitality has been considered by the Board. 4. It can be argued that food or beverages provided to low-paid employees are more on account of their low salary than as a measure of hospitality. Hence, the Board has decided that the expenditure on prov .....

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..... ch employees of a company, they should be neither directors nor persons having substantial interest in the company." In respect of other high-paid employees, i.e., those mentioned in section 17(2)(iii), however, such expenditure will continue to be treated as entertainment expenditure. 5. You are requested to bring the contents of this circular to the notice of all the officers working under y .....

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