Deepak Thukral
Manager Accounts
Vishwa2
Manager-finance
Manish01
Consultant

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Hello Everybody !

This is K.Revathi from Indore. I'm new to this forum. I'm working with an IT company as HR Exec. I need your help, about fringe benefit Tax.

Ours is a small org. we want to finalise the salary structure and i need your inputs for the same.

I want to know if comp. provides Conveyance allowance and the employees are ready to pay the FBT of their share, which is usually paid by employer. Is it a Viable option ? and would it be considered from CTC concept?

If the company deduct such amount in which head it need to be shown from Legal aspect?

Is an employer need to go for any registration for FBT?

If the employer starts from November then advance tax need to be deposited or ?

Pls throw some light on above queries.

Awaiting for the imputs..........................

Regards,

Revathi

Dear Revati
1. No FBT needs to be deducted on conveyance allowance given to employee.
However on reimbursment of conveyance expenses incurred by employee, FBT is payable. If it is recovered from employees, it can be credited to FBT A/c itself.
2.There is no need of registration for FBT anywhere.
3. If you are starting business in November then you are required to calculate FBT for the year ended upto 31.03.08 and deposit it in next two instalments on 15 Dec and 15 March

THE LITMUS TEST TO ASCERTAIN WHETHER THE EXPENSE INCURRED BY THE COMPANY UNDER THE SPECIFIC HEAD IS INCLUDED IN THE TAXABLE INCOME OF THE EMPLOYER. IF IT IS NOT INCLUDED, THEN FBT WILL HAVE TO BE PAID ON THAT. FOR EXAMPLE THE CONVEYANCE PAID, IF IT IS INCLUDED IN THE EMPLOYEE'S SALARY, THEN NO FBT IS REQUIRED TO BE PAID ON THIS SUM. IF IT IS NOT INCLUDED IN THE EMPLOYEE'S SALARY AND PUT TO TAX, THEN FBT HAS TO BE DEDUCTED. THE CONCEPT OF FBT IS THAT CERTAIN PAYMENTS ARE MADE BY THE COMPANY TO THE EMPLOYEES AND ARE CHARGED TO THE PROFIT AND LOSS ACCOUNT. ON THESE PAYMENTS NEITHER THE EMPLOYEE NOR THE EMPLOYER PAYS THE TAX. TO CURB, THIS MENANCE THE FBT HAS BEEN INTRODUCED.
DEEPAK THUKRAL
CHANDIGARH

Revati,

Let me put it in simple way.

Income tax is exempt to the extent of Rs. 9600/- per annum on conveyance allowance under section 10 of income tax Act. FBT is exempt in that case.

If you are providing conveyance allowance over and above the amount of Rs.9600/-, for example if you are reimbursing Rs.25000 per annum. The first 9600/- is exempt from tax balance Rs. 15400/- if you are taxing in the hands of employee while computing his total income, you need not pay FBT. If you are not taxing employee in his hand, you will have to pay FBT.

The rule is simple. If any employee related expenditure is treated as income taxed in the hands of employee while computing his total taxable income, you need not pay FBT. If not, you will have liability to pay if such items falls within perview of Sec 115WB of Income tax.

Please note conveyance expenditure reimbursed exceding 9600/- surely attract tax if that is not part of taxable income of employee.

There are no separate registration required.

All advance tax rules of Income tax will apply to FBT also.

Rgds

vishwanath.

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