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FBT on Insurance of Car

Ravi (181 Points)

10 May 2007

Dear Professional Colleague,
Whether FBT would be leviale on Insurance premium of Car?

In my view, it not to be, because insurance is not running & Maintenance Exp. It is incurred for safty measure.

In a taxmann book, it is stated that no FBT on Insurance of car but there is no circular

Hope your reply asap.

Regards,

Ravi

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9 Replies

Vk Duggal (320 Points)
Replied 10 May 2007

Though technically running & maintenance does not cover insurance but what will happen if there is any claim on account of any accident.

It will be advisable to consider the insurance on car for FBT value.

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(Guest)

You cannot run a car without insurance. If you do - that is a violation of the Motor Vehicles act. As such - insurance can be considered a part of the "running cost" of a car - at least a cost of running it legally.

M.Sriram Shenoy (CA Final) (814 Points)
Replied 27 May 2008

Car Insurance is a part of running & maintenance cost i-e. it is ancilliary towards running & maintenance, though it is strictly not an item of maintenance cost of the car.

(Guest)

Dear Professional Colleague,
Whether FBT would be leviale on Insurance premium of Car?

In my view, it is liable to FBT, because without insurance, running of car would attract penalty. Insurance is compulsory for running of car. It does't matter incurred for safty measure.

In a taxmann book, there is inlusive information not exaustive information, there is no circular.

Most of the Industires paying FBT on Insurance of car.

Regards,

Anil Kumar Singh

anupam (ca student) (49 Points)
Replied 28 May 2008

yes its a running and maintenance expenses without any literal contradiction without insurance you cant run your car .

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saurabh (CA) (552 Points)
Replied 08 June 2008

insurance on car is to be covered as running & maintainence of motor vehicle.. u/s 115WB(2) clause (H).. as insurance is obligatory for running a car.. 20%of the value of insurance will be chargeable to %

CA Rahul Gupta (Ca ) (57 Points)
Replied 09 June 2008

Brother,FBT would be leviable on the insurance expenses of car.

CA. Gurdeep Singh Chawla (C A) (7080 Points)
Replied 09 June 2008

FBT would be leviable

Vijay Sarathi H (PARTNER) (562 Points)
Replied 15 June 2008

Boss u/s.115WB(2)(H), It's mentioned that Repair, Running and Maintenance of Motor cars include:

Repairs, Fuel cost, Maintenance, Depreciation, Lease rent, Salary paid to drivers , rent of garage, and interest on loans to purchase a car. so the act is silent whether to pay fbt on insurance. Since there is no a specific provision we can't include it under FB. So it can be ignored while computing FBT. Its my view. Some say Insurance is a maintenance cost and fbt will attract. Thought it seems to be in the nature of maintenace, its not at all a maintenace. Its a contingent expenditure rather.