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FBT

sai krishna (Student) (186 Points)

29 December 2008

Hi friends

Pls clarify me the following queries relating to FBT

1. Whether internet charges and advertisement expenses attracts FBT

2. Expenses incurred for the purpose of guest by the company attracts FBT or not

3. whether FBT attracts for donations made by the company

4. Reimbursement of fuel expenses towards employee for his two wheeler. Whether FBT attracts for this

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8 Replies

abhishek bhatt (CA student) (136 Points)
Replied 29 December 2008

if loan is taken for pur car then int will attract FBT and in case of AD there are various rules for FBT and accordingly it attracts FBT

Internet charges are attracting FBT

donation made does not attract FBT

there is no applicability of FBT in case of Reimbursements.

Exp. incurred in connection with guest is attractinf FBT under head "Hospitality"

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sai krishna (Student) (186 Points)
Replied 29 December 2008

Hi abhishek

U said that reimbursement wont attracts FBT. If the reimbursement is in the nature of conveyance then FBT attracts or not and i have one more doubt that telephone expenses are eligible for FBT, I want to know that what kind of expenses will be taken under this i.e telephone reimbursement expenses made to employees are eligible for FBT or not.

Arul Ganesh (Company Secretary) (98 Points)
Replied 29 December 2008

reimbursement of conveyance attracts FBT. Telephone expenses attaract FBT. The logic as i understood is an employee is may use the office phone for his personal use also. But the cost is beared by the employers. therefore its a kind of frienge benefit paid by the employer to the employees. similarly, during going on offical local travel it is assumed an employee may look into his personal activitiy also for which he is paid. but an employer cannot allocate the expenses employee-wise. therefore the employer has to pay tax on this. Out of the total expenses, 20% or 5% is assumed as personal usage and taxed as FBT. This is strictly my personal logic on FBT.

sai krishna (Student) (186 Points)
Replied 30 December 2008

Can any one of you suggest me the best book regarding FBT.

aasita (ACA) (387 Points)
Replied 30 December 2008

i think internet chrages doesnt attract Fbt.correct me if i m wrong

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Shudhanshu Agrawal (Business) (2570 Points)
Replied 30 December 2008

Dear Friends,

Under Section 115WA(1) which is related to Charges of FBT it is mentioned that there should be a relationship of employer and employee for applicability of FBT and it is paid by employer irrespective its taxable income

Answer of Mr. Sai Krishna's Query

1. FBT is not applicable in case of Payment for Internet Charges

2. In second case as well it is not applicable but it willbe applicable if that guest is the employee of the company

3. Not Applicable in case of Donations

4. FBT willbe applicable in this case

abhishek bhatt (CA student) (136 Points)
Replied 03 January 2009

if internet connection is thru leased line then in this case it will not attract fbt.

any kind of guest for eg. statutory auditor is provided with the lunch it will attrat fbt under head "hospitality" .if it is provided to employees ouside factory or office it will attract fbt under head "staff welfare".If guests are relating to business it need to be treated as "sales promotion exp." thus attracting fbt.