FBT ON AWARDS
This query is : Resolved
24 December 2007
What is the value of fringe benefit in case of "AWARDS".Is awards subject to FBT?
25 December 2007
FBT AS PER SEC 115 WB(1) MEANS ANY CONSIDERATION FOR EMPLOYMENT PROVIDED BY WAY OF PRIVILEGE,SERVICE,FACILITY,OR AMENITY, DIRECTLY OR INDIRECTLY PROVIDED BY EMPLOYER BY WAY OF REIMBURSEMENT OR OTHERWISE TO HIS EMPLOYEES.
THUS EMPLOYER-EMPLOYEE RELATIONSHIP IS A MUST FOR ANY EXP.TO BE TREATED AS FBT.
SO IF THE AWARD IS TO AN OUTSIDER,IT DOES NOT ATTRACT FBT.EVEN TO THE EMPLOYEES IF AN AWARD IS GIVEN IT IS EXEMPT IN THE FOLOOWING SPECIFIC CASES
FBT IS NOT PAYABLE BY TRUST OR FUND OR INSTITUTION IF ITS INCOME EXEMPT UNDER SEC10(23C) OF IT ACT OR IS REGISTERED UNDER SEC 12AA. SO EVEN A SEC 25 COMPANY IF IT MEETS THESE CRITERION IS NOT LIABLE FOR FBT.
NOTE 2 TO SEC 115WB(2) SAYS ANY EXP. ON ADVT. IF IT IS AN EXP. BY WAY OF PAYMENT TO ANY PERSON OF REPUTE FOR PROMOTING SALE OF GOODS OR SERVICES OF BUSINESS OF EMPLOYER IS EXEMPT FROM FBT .
ALSO IF TAX IS PAYABLE BY AN EMPLOYEE IN RESPECT OF SUCH HONOUR OR AWARD ,FBT IS NOT ATTRACTED.
EVEN OTHERWISE ,AN AWARD CANNOT BE CLASSIFIED AS ANY FRINGE BENEFIT PROVIDED OR DEEMED TO BE PROVIDED BY AN EMPLOYER TO HIS EMPLOYEESAS PER SEC 115WA WHICH PROVIDES BASIS OF CHARGE FOR FBT.
AN AWARD IS ALSO NOT A CONSIDERATION FOR EMPLOYMENT UNDER SEC 115WB(1). HENCE NO VALUE CAN ALSO BE ATTRIBUTED.
R.V.RAO
THUS EMPLOYER-EMPLOYEE RELATIONSHIP IS A MUST FOR ANY EXP.TO BE TREATED AS FBT.
SO IF THE AWARD IS TO AN OUTSIDER,IT DOES NOT ATTRACT FBT.EVEN TO THE EMPLOYEES IF AN AWARD IS GIVEN IT IS EXEMPT IN THE FOLOOWING SPECIFIC CASES
FBT IS NOT PAYABLE BY TRUST OR FUND OR INSTITUTION IF ITS INCOME EXEMPT UNDER SEC10(23C) OF IT ACT OR IS REGISTERED UNDER SEC 12AA. SO EVEN A SEC 25 COMPANY IF IT MEETS THESE CRITERION IS NOT LIABLE FOR FBT.
NOTE 2 TO SEC 115WB(2) SAYS ANY EXP. ON ADVT. IF IT IS AN EXP. BY WAY OF PAYMENT TO ANY PERSON OF REPUTE FOR PROMOTING SALE OF GOODS OR SERVICES OF BUSINESS OF EMPLOYER IS EXEMPT FROM FBT .
ALSO IF TAX IS PAYABLE BY AN EMPLOYEE IN RESPECT OF SUCH HONOUR OR AWARD ,FBT IS NOT ATTRACTED.
EVEN OTHERWISE ,AN AWARD CANNOT BE CLASSIFIED AS ANY FRINGE BENEFIT PROVIDED OR DEEMED TO BE PROVIDED BY AN EMPLOYER TO HIS EMPLOYEESAS PER SEC 115WA WHICH PROVIDES BASIS OF CHARGE FOR FBT.
AN AWARD IS ALSO NOT A CONSIDERATION FOR EMPLOYMENT UNDER SEC 115WB(1). HENCE NO VALUE CAN ALSO BE ATTRIBUTED.
R.V.RAO
26 December 2007
Could ne1 provide me a checklist on notes to accounts and Audit report.
CA Ghanshyam Baheti
(Expert)
27 December 2007
So far as FBT is considered it is levied only on the specified expense which doesnot include award.But however if its nature is such that it can be classified under prespecified head than the question of liabilty arises so you first narrate the nature of transaction to me for crystal clear answer
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