shibin.s.pullan (student) (116 Points)
29 May 2009friends i need two clarifications regarding FBT
1.if a person is not liable for I.T but for F.B.T.Then which rate should be adopted for calculation of depreciation on motor car for the purpose of F.B.T?
2.If loss on sale of motor car will attract F.B.T?
Swati Agarwal
(service)
(25 Points)
Replied 29 May 2009
| Originally posted by :shibin.s.pullan | ||
| " | friends i need two clarifications regarding FBT 1.if a person is not liable for I.T but for F.B.T.Then which rate should be adopted for calculation of depreciation on motor car for the purpose of F.B.T? 2.If loss on sale of motor car will attract F.B.T? |
" |
wt does it mean dat a person is not liable for It, is he not assessable, or he dont have tax liability.?any how for calculation of depreciation income tax rates will be used, and loss on sale of motor car will never attract FBT.
Joe
(CA)
(189 Points)
Replied 29 May 2009
Just a sec Shibin, you seem a bit confused...
FBT is attracted if all the following conditions are satisfied as per Q. 1 of CBDT circular 8/2005:-
1. There is employer-employee relationship.
2. Employees based in India.
3. Is a person (as per Income Tax Act) not being individual or HUF.
4. Income is not exempt u/s 10(23C) of Income Tax Act or is a fund/ institution/ trust not registered u/s 12AA of the Act.
5. Contributes to approved superannuation fund on employee behalf or provides free/ concessional ticket for employees/ their family's private journeys.
6. Whether he carries out business or profession or even activity which is not for profit or gain, if he incurs expenses of the nature specified in S. 115WB(2)
So from the above you can see that a person who is not liable to tax may very well have to pay FBT if he satisfies conditions. But, a person exempt/ registered as in pt.4 would not be liable to FBT, so there is no question of any relation between liability to IT and payment of FBT.
For the second part of your first question, Q. 83 of the same CBDT circular clarifies that the rate FOR THE PURPOSES OF FBT shall be the Income Tax Act rate. So, there is no attempt to distinguish between the depreciation rates under the two Acts for FBT purposes based on liability to tax.
Finally, loss on sale of car as per books is disallowed as expense under Income Tax Act as it is considered under Capital Gains head instead of Profits/ gains of business/ profession. Also, there is no express provision that taxes it to FBT
shibin.s.pullan
(student)
(116 Points)
Replied 29 May 2009
As the person is not liable to pay I.T he is not prepaing a schedule for depreciation as per I.T..
He is just having only one shedule for dep. that is as per the companies act ...
my question is "should i make another schedule as per I.T rates of dep. to calculate F.B.T on dep. on motor car"?
saurabh
(CA)
(552 Points)
Replied 01 June 2009
yes shibin as joel explained to u very clearly that for calculating FBT Income Tax rates of depr will be applicable. So, u would have to make seperate depreciation schedule as per the IT Act.
CAclubindia
