FBT on Free Items
This query is : Resolved
22 September 2008
a retailer having schemes for consumers like buy product worth Rs.1000 and get free steel tiffin like wise. all free items are given on purchase of specific amount and slab wise. whether FBT will attract under Sales promotion or Gift
22 September 2008
All these expenses are to be treated as sales promotion expenditure and therefore are liable to FBT.
22 September 2008
Thank you sir. But our CA Says that with FBT rules released with wording :
98. Does a gift to customer fall under 'sales promotion' or 'gift'?
A: In terms of the rules of interpretation of a statute, a specific provision in law overrides a general provision. Therefore, a gift to a customer, even though for the purposes of sales promotion, would fall within the scope of the specific provision of clause (O) of subsection (2) of section 115WB relating to 'gift'.
the items shuld be covered under Gift.
your expert opinion about it?
98. Does a gift to customer fall under 'sales promotion' or 'gift'?
A: In terms of the rules of interpretation of a statute, a specific provision in law overrides a general provision. Therefore, a gift to a customer, even though for the purposes of sales promotion, would fall within the scope of the specific provision of clause (O) of subsection (2) of section 115WB relating to 'gift'.
the items shuld be covered under Gift.
your expert opinion about it?
22 September 2008
FBT is for benefits to employee as long as you are a customer, it is not a gift, if arises only if you are an employee.
Any goods given even as gift to any other person other than you employee will not attract FBT.
Any goods given even as gift to any other person other than you employee will not attract FBT.
22 September 2008
I think Mr.Kotresh's view can be pressed against the FAQ 98 cited by Mr.Pawan.
22 September 2008
pawan is correct
25 September 2008
See yar.....
again i am asking a query on this,
We r havin a client doin Chit Business n they were giving free gifts to the customers... so we told them that pls include such value of gift in the cals of FBT under GIFTs...but he says that, we are not giving that gifts freely...i asked how..then he told at the time of accepting into the group as a member we will collect (say collected) registration charges....so we are not giving freely....he concluded...
my doubts are,
1.Whether FBT applicable for the above Gifts?
2.IF No tell me whether my client is ri8?
3.If Attracts FBT then under which head you have to Add..i.e, under GIfts? or Under Sales Promotion?
again i am asking a query on this,
We r havin a client doin Chit Business n they were giving free gifts to the customers... so we told them that pls include such value of gift in the cals of FBT under GIFTs...but he says that, we are not giving that gifts freely...i asked how..then he told at the time of accepting into the group as a member we will collect (say collected) registration charges....so we are not giving freely....he concluded...
my doubts are,
1.Whether FBT applicable for the above Gifts?
2.IF No tell me whether my client is ri8?
3.If Attracts FBT then under which head you have to Add..i.e, under GIfts? or Under Sales Promotion?
25 September 2008
LIABLE FOR FBT:1) Expenses on free offers, artwork or payment of royalty charges in respect of free offer products. 2) Expense incurred for hotel stay, air ticket charges in relation to customers/clients. 3) Expenditure on gifts under trade schemes or for promotion of co's products to Distributors / Retailers. 4) Employer carrying out the product research through its own employees, the expenditure considered deemed fringe benefits under any other clause.
NOT LIABLE FOR FBT:1) Advertisement in any print, journals, catalogues or price list or electronic media or transport system, including rental on advertisement. 2) Business meetings: Holding or participating in press conference or business convention or fair or exhibition. 3) Sponsorship of any sport or any other event organised by any Government Agency, Trade Association or Body. 4) Statutory Advertisement : 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 a Tribunal. 5) Other Advertisement: Advertisement by way of Signs, Artwork, Painting, Banners, Awnings, Direct Mails, Electric Spectaculars, Kiosks, Hoardings, Bill Boards, display of products or by way of such other medium of advertisement. 6) Payment to advertising agency for any of the above purpsoe. 7) Sales promotion expenses like brokerage and commission / performance based commission. 8) Expenditure relating to salesmen appointed by distributors for co's products reimbursed through credit notes.
NOT LIABLE FOR FBT:1) Advertisement in any print, journals, catalogues or price list or electronic media or transport system, including rental on advertisement. 2) Business meetings: Holding or participating in press conference or business convention or fair or exhibition. 3) Sponsorship of any sport or any other event organised by any Government Agency, Trade Association or Body. 4) Statutory Advertisement : 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 a Tribunal. 5) Other Advertisement: Advertisement by way of Signs, Artwork, Painting, Banners, Awnings, Direct Mails, Electric Spectaculars, Kiosks, Hoardings, Bill Boards, display of products or by way of such other medium of advertisement. 6) Payment to advertising agency for any of the above purpsoe. 7) Sales promotion expenses like brokerage and commission / performance based commission. 8) Expenditure relating to salesmen appointed by distributors for co's products reimbursed through credit notes.
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