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FBT - Is it required to be paid when not claimed for Income

This query is : Resolved 
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(Querist)
14 October 2008 FBT is not a tax on Income

FBT is a tax on expenses

Is FBT applicable when some one is not claiming those expenses at all?

Two scenarios:

01. When a company's total income is exempted, the company can prepare memo of Income by disallowing the expenses subject to FBT and arrive at profit / loss. Suich profit is escalated to the extent of expenses subject to FBT. However, the profit is not taxable, since exempted.

02. When a company's Carry Forward Loss is huge and by not claming expenses subject to FBT the profit can be arrived.

Since this action doesn't have any impact on Book Profit, the status of MAT liability may not undergo any alteration.

Please clarify
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
14 October 2008 If the expenditure is booked FBT provisions attract. Memo of income and c/fd loss etc,as you said in the query,has no relavance for determining the taxability of FBT.
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Senguttuvan K

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Senguttuvan K (Querist)
15 October 2008 Expenditure is debited to P & L, but not for Income Tax purpose.

Many of the expenses brought under the FBT net are satisfying even 1% of the basic meaning of FB. When the government (welfare state) is travelling beyond (eg.sales promotion - what benefit employees are getting?)the principle and the FM is not keep up his budget speech, I strongly feel that professionals should find some way to teach lesson.

Is there any way that expenses are made, payment made from company account. But not accounted for P & L as well for IT purpose.
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Senguttuvan K

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Senguttuvan K (Querist)
15 October 2008 Expenditure is debited to P & L, but not for Income Tax purpose.

Many of the expenses brought under the FBT net are satisfying even 1% of the basic meaning of FB. When the government (welfare state) is travelling beyond (eg.sales promotion - what benefit employees are getting?)the principle and the FM is not keep up his budget speech, I strongly feel that professionals should find some way to teach lesson.

Is there any way that expenses are made, payment made from company account. But not accounted for P & L as well for IT purpose.
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Hiral Raja

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Hiral Raja (Expert)
20 November 2008 FBT will be attracted in both the scenarios mentioned above. Once expenditure is incurred, FBT will have to be paid.
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