Whether Attracts FBT or Nt? under Whih Head? GIft r sal prom

This query is : Resolved

CA Bosu babu (Querist)
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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?

Guest

Guest (Expert)

25 September 2008 Hi

As per my own opinion to the best of my knowledge of the FBT provisions...

1) gift of any kind attracts FBT provisions.

2)Your client is not right, as the gift to any person whehter customer or else is to be attracted by FBT Provisions.

3) sales promotion head include only free offer with the product sold.... hence is your client is selling any product and giving any offers of providing free tattoos, etc then it will be treated as sales promotion.

If your client can bifurcate the sum received as membership fees and sells of items in place of treating it as gift it will be better for him.

Rohit

CMA Jitendra Singh

CMA Jitendra Singh (Expert)
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29 September 2008 Hi Bosu,

Yor case is of CHIT FUND company and reply of rohit is general practices in industry.Rohit is right in his comment.

But u have to see your client view also ,to avoid FBT u may advice client to book same as sale against registration charges received

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