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Insurance on cars-Liable 2 FBT U/S115WB(2)(H)

NEHA (93 Points)

17 October 2007

Does insurance on motor-car fall U/s 115WB(2)(H), i.e. repairs,running & maintenance of cars?

If yes, even the 1st insurance which is capitalised be FBT liable?

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8 Replies

Abhishek (Chartered Accountant) (142 Points)
Replied 17 October 2007

ya it is liable to FBT under the said section even the first insurance... different views prevail over the capitalisation of the first insurance...an argument against the capitalisation can be that since the premium paid is a period cost i.e., it relates to a single year it should be not be capitalised...waise whether capitalised or not FBT is levieble for sure....

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Vikas K Dhameja (Credit Research) (81 Points)
Replied 17 October 2007

Car insurance is liable to FBT irrespective of it's capitalized or expense out. If you remember there are columns in FBT Annexure viz : 1. charged to P/L 2. Carrried to balance sheet. 3. Charged under any other head. 4. Reimbursement. Capitalized insurance will be shown under "Carried to balance sheet".

Rahul Gupta (Article) (47 Points)
Replied 17 October 2007

yes insurance will be liable to fbt.but if capitalise it then it will automtically be covered by fbt as if ypu capitalise it then it will be debited in the profit and loss account in the form of dep. on car on which you have to pay fbt.

NEHA (93 Points)
Replied 17 October 2007

But if Capitalised insurance is FBT liable...aint it double taxation coz...depn on motor cars is liable 2 FBT???

(Guest)

Insurance of vehicles is not running and maintenance expense...and will not be liable to FBT

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Azmathullah Khan (Accounts Manager) (1386 Points)
Replied 22 May 2008

Yeah, The insurance amount which is capitilised to be depreciate and the FBT will be paid on that

CA Ravish Trivedi (The Possibilities are Infinite...) (772 Points)
Replied 05 September 2008

Capitalised insurance is liable to FBT.

NIKUNJ RATHI (C.A) (56 Points)
Replied 07 September 2008

FBT is payable on insurance of car if it is debited to P&L account. If it is capitalized the same shall not be considered for FBT. Fbt on the same will be adjusted through depreciation.

There is no provision of double taxation on a single expenditure.

Nikunj Rathi