Income Tax Act, 2025
Section 5: Ins. by s. 38, ibid. (w.e.f. 12008).
5. Ins. by s. 38, ibid. (w.e.f. 12008).
524
Explanation.—For the purposes of this clause,—
(i) “specified security” means the securities as defined in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956) 1[and, where employees' stock option
has been granted under any plan or scheme therefor, includes the securities offered under such
plan or scheme];
(ii) “sweat equity shares” means equity shares issued by a company to its employees or
directors at a discount or for consideration other than cash for providing know-how or making
available rights in the nature of intellectual property rights or value additions, by whatever name
called.]
(2) 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 following purposes, namely:—
(A) entertainment;
(B) provision of hospitality of every kind by the employer to any person, whether by way of
provision of food or beverages or in any other manner whatsoever and whether or not such provision
is made by reason of any express or implied contract or custom or usage of trade but does not
include—
(i) any expenditure on, or payment for, food or beverages provided by the employer to his
employees in office or factory;
(ii) any expenditure on or payment through paid vouchers which are not transferable and
usable only at eating joints or outlets;
2[(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;]
(C) conference (other than fee for participation by the employees in any conference).
Explanation.—For the purposes of this clause, any expenditure on conveyance, tour and travel
(including foreign travel), on hotel, or boarding and lodging in connection with any conference shall be
deemed to be expenditure incurred for the purposes of conference;
(D) sales promotion including publicity:
Provided that any expenditure on advertisement,—
(i) being the expenditure (including rental) on advertisement of any form in any print
(including journals, catalogues or price lists) or electronic media or transport system;
(ii) being the expenditure on the holding of, or the participation in, any press conference or
business convention, fair or exhibition;
(iii) being the expenditure on sponsorship of any sports event or any other event organised
by any Government agency or trade association or body;
(iv) being the expenditure on the publication in any print or electronic media of any notice
required to be published by or under any law or by an order of a court or tribunal;
(v) being the expenditure on advertisement by way of signs, art work, painting, banners,
awnings, direct mail, electric spectaculars, kiosks, hoardings,3[bill boards, display of products] or
by way of such other medium of advertisement; 4***
1. Subs. by Act 18 of 2008, s. 25, for “and includes employees’ stock option” (w.e.f. 12008).
“specified security” means the securities as defined in clause
of section 2 of the
Securities Contracts
Act, 1956 (42 of 1956) 1[and, where employees' stock option
has been granted under any plan or scheme therefor, includes the securities offered under such
plan or scheme];
“sweat equity shares” means equity shares issued by a company to its employees or
directors at a discount or for consideration other than cash for providing know-how or making
available rights in the nature of intellectual property rights or value additions, by whatever name
called.]
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 following purposes, namely:—
entertainment;
provision of hospitality of every kind by the employer to any person, whether by way of
provision of food or beverages or in any other manner whatsoever and whether or not such provision
is made by reason of any express or implied contract or custom or usage of trade but does not
include—
any expenditure on, or payment for, food or beverages provided by the employer to his
employees in office or factory;
any expenditure on or payment through paid vouchers which are not transferable and
usable only at eating joints or outlets;
2[
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;]
conference (other than fee for participation by the employees in any conference).
Explanation.—For the purposes of this clause, any expenditure on conveyance, tour and travel
(including foreign travel), on hotel, or boarding and lodging in connection with any conference shall be
deemed to be expenditure incurred for the purposes of conference;
sales promotion including publicity:
Provided that any expenditure on advertisement,—
being the expenditure (including rental) on advertisement of any form in any print
(including journals, catalogues or price lists) or electronic media or transport system;
being the expenditure on the holding of, or the participation in, any press conference or
business convention, fair or exhibition;
being the expenditure on sponsorship of any sports event or any other event organised
by any Government agency or trade association or body;
being the expenditure on the publication in any print or electronic media of any notice
required to be published by or under any law or by an order of a court or tribunal;
being the expenditure on advertisement by way of signs, art work, painting, banners,
awnings, direct mail, electric spectaculars, kiosks, hoardings,3[bill boards, display of products] or
by way of such other medium of advertisement; 4***
1. Subs. by Act 18 of 2008, s. 25, for “and includes employees’ stock option” (w.e.f. 12008).