FBT, Depreciation & Investment Allowance

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Venkat (Querist)

11 July 2008 Dear All,

I have the following quries.. can any one of you please clarify kindly:

1.) What is the rate of Fringe Benefit Tax applicable on Gifts?

2.) What is the rate of Depreciation applicalbe on Furniture?

3.) What is INVESTMENT ALLOWANCE RESERVE and is there any upper limit for the same?

Thanks in advance,
Venkat

CA. Ramesh P Choudhary

CA. Ramesh P Choudhary (Expert)

11 July 2008 1. FBT on Gifts is at the rate of 50%.

2. Depreciation applicalbe on Furniture is at the rate of 10% under IT Act.

3. Pls refer Section 32A of the income tax Act.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)

12 July 2008 A deduction of 25% of the cost new ship or aircraft or Plant and Machinery purchased during the year was available u/s 32A upto AY 1987-88. One of the conditions for availing this deduction was that a Reseve called Investment Allowance Reserve was to be created out of the income of the year by debiting the P & L Account with an amount not less than 75 % of such deduction. The reserve was supposed to be utilised in the next 10 years for purchase of new plant and machinery by transferring an equivalent amount to the Investment Allowance Utilisation Reserve a/c.

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