FBT on FREE Parts

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This query is : Resolved

Prakash (Querist)

25 May 2009 WE SOLD 50 PCS EXCISABLE PRODUCT TO OUR DISTRIBUTOR. AFTER 4 MONTHS THEY HAVE REURN 5 PCS FOR REPAIRING WHCIH RECEIVED FROM CUSTOMER AFTER SELLING THAT PRODUCT. IN REPAIRING PROCESS WE USES SOME EXCISABLE PARTS FOR REPAIRNG THAT GOODS (THIS PARTS IS FREE UNDER WARRANTY PERIOD). WHAT ENTRY WILL PASS FOR THIS ?

IS IT
ADVERTISEMENTA/C ..........DR.
TO FREE SAMPLE
TO EXCISE
To Education Cess
To S&Hs Cess

Will we have to pay FBT on this FREE parts?

Ca Anand Dubey

Ca Anand Dubey (Expert)

25 May 2009 in my opinion the head should be "replacement and maintenance" in place of "advertisement" then no fbt applicable

taxindiaconnect

taxindiaconnect (Expert)

25 May 2009 It is expenditure on warranty, hence should be booked under the head warranty expenditure. The companies produing the product with warranty attahed to it should provide for warranty expenditure on the product sold during the year on some past experience and actual expenditure should be charged agsinst such provisions. There in no FBT on this expenditure.

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