Regarding FBT

This query is : Resolved

CA Anil Jain (Querist)
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17 October 2008 Dear Experts,

Please help me on the following issue, if seems justifiable.

1. In entertainment expenses, hotels bills, club bills (up to Rs. 2500/- per month) are free from the ambit of FBT if bills are in the name of employees.
(Because they cover in Perquisite u/s 17(2) (iv) or otherwise.( any other logic)

2. Conveyance Reimbursement for discharging the office duties and obligation are free from FBT or not (I couldn’t able to understand)
If yes (then why not Tour and Traveling)

3. If running and maintenance exp. (including fuel / petrol expenses) not attracts FBT (on other than Car and Aircraft) like bike, then under which head this expenditure should be booked. (Under conveyance or in any other head which doesn’t attract FBT)
4. Car Driver salary attracts FBT?

5. Reimbursement of Private Journey bills are exempt from FBT because covered u/s 17 (i) (iv) but what is the logic to the extent of Rs. 84000- P.A.

Looking forward to your reply.

Rgds/-

Anil Jain
9818 921865

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Guest (Expert)

18 October 2008 my opinion about ur quest

1. if entertaiment exp. then exepmpted upto 25000/- p.a. and balance 5000/-will be taxable in the hands of employee so there is no need to levy FBT because the main rule of FBT is that the expenditure should not be expented under income tax act and it should not be taxable in the hands of employees

2.As per the new supreme court's decision if you are reimbursing the exp. of employees for conveyance exp. from home to office then it will be taxable in the hands of employee becase it is benefit so and on the other hands travelling & Touring exp. is never taxable in hands of employee so it is liable for FBT.

3. It should be shown under the Heads "Fule & Petrol(Bike)"

4. Yes Car driver's salary attracts because it includes all running & maintance exp. of car including salary of driver of car or salary of pilots of aircraft

5.I don't know about it

CA Anil Jain

CA Anil Jain (Querist)
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24 October 2008 waiting for some one other response!

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CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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15 November 2008 1. Reimbursement of Entertainment Expenses, Hotels Bills and Club Expenditure are liable to FBT under separate sections. When the word "Reimbusement" is used then it is already clear that the bills are on the name of employees. All these expenses are liable to FBT and also taxable in the hands of employees u/s 17(2)(iv). It is clearly mentioned in the section 17(2)(iv) that even these expenses are liable to FBT in the hands of Employer they are also taxable in the hands of Employees.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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15 November 2008 2. Conveyance Reimbursement for discharging the office duties will not comes under the ambit of FBT.

3. It should be posted under the head "Fuel and Maintt. Expenses (Bike)

4. If the driver is regular employee of the company, his salary will not attract FBT. Only in case of Reimbursement of car expenses to Employees, salary of driver attracts FBT.

5. First the section mentioned by you as 17(i)(iv) is incorrect. I think you want to mention 17(2) (iv) because Perks are covered by this section not by the section mentioned by you.
Next I don't any such limit (Rs. 84,000 p.a) mentioned under this section. What ever comes u/s 17(2)(iv) is fully taxable in the hands of employees.
I cann't see any provision mentioned in FBT to cover it.