21 October 2007
A company engaged in generation of electricity wants to Reclassify the expense and wants to avoid FBT in Following manner. Central Government appoints Central Security forces for Safeguarding its assets From Terrorism as Power plant is in High Security Zone. So it Divide the Expense on Running Hospital, grant given for running the schhol and many other expense Which are Liable to FBT in ratio of its Employees and Number of security forces Personnel and thus it transfer share of such expense in security expense A/c and avoid Tax.(The services Of Hospital and school etc are available to Both company employees and Military personnel). For Eg If Company has 10 Employees and Central Government appoints 4 Military personnel for plant Security and company incurred RS 140 as Expense on which FBT is Leviable .So company transfers Rs 40(140/14) In Security Expense A/c from the concerned expense A/c(Like Grant in Aid School A/c) and pays FBT on only Rs 100.
Is such Classification Is permiited under the Act?Can Company Continue with the Present System of Payment of FBT while complying with Law?
22 October 2007
the charging section 115WA deals with FBT charge which says,FBT IS PAYABLE ON FRINGE BENEFITS PROVIDED OR DEEMED TO BE PROVIDE BY EMPLOYER TO EMPLOYEES, AND PROVIDED DURING THE YEAR AND THERE SHALL BE EMPLOYER AND EMPLOYEE RELATIONSHIP. SO ONLY WHERE EMPLOYER AND EMPLOYEE RELATIONSHIP IS THER,YOU ARE LIABLE FOR FBT. UNDER 115WC PART B,EMPLOYEES WELFARE NOT BEING ANY EXP. INCURRED OR PAYMENT MADE TO FULFILL ANY STATUTORY OBLIGATION .....OR PROVIDE FIRST AID FACILITIES IN THE HOSPITAL OR DISPENSARY RUN BY THE EMPLOYER. IF THE HOSITAL IS RUN BY EMPLOYER YOU ARE NOT LIABLE FOR FBT ON THE SPECIFIC NATURE OF EXP. STATED ABOVE . THUS SUBJECT TO THE SUBSECTIONS OF 115 WA AND WC GIVEN ABOVE YOU ARE ON THE RIGHT SIDE OF THE LAW IF YOU DO. R.V.RAO
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