05 May 2009
A company got a CC limit with bank and purchases a car of that money and now pays interest on total withdrawn amount. No seperat intt is charged on amt used for car. Will this interest amt attract FBT or not?
05 May 2009
Yes, if you will post the interest on car separately in the books. However if you will show the account head as interest on CC then no FBT applicable.
05 May 2009
Interest on loans taken for purchase of cars falls within the scope of clause (H) of subsection (2) of section 115WB relating to repair, running and maintenance of motor cars. Accordingly, expenditure by way of interest on loans taken for purchase of cars is liable toFBT.
****For further clerification please read CIRCULAR NO 8/2005, DATED 29.08.2005***
22 May 2009
But Loan has never been taken for purchase of Car. It is just a C.C limit against the stock & debtors of company and the Company has utilized some amt of this limit for purchasing the car. Then how can you say that Its loan for car and how can the FBT liability be attracted then? Suppose, instead of paying via Bank Cheque, if the Co purchases it in Cash out of Proceeds from Debtors, even then the situation will be same but whether FBT would have been attracted in that case?
CAclubindia
