05 January 2009
REPAIR, RUNNING & MAINTENANCE OF AIRCRAFTS
This clause of Section 115WB (2) considers expenditure incurred by employer towards Repair, Running and Maintenance of Aircrafts including depreciation thereon and hence makes it liable to Fringe Benefit Tax. It includes the following:-
*
Though Fringe Benefit Taxation does not make any distinction between Capital and Revenue but this clause specifically provides for taxability of Revenue expenses as fringe benefits only. *
So acquisition of Aircraft(s) is not taxable as fringe benefits under this clause; *
Repairs Expenses of Aircraft(s) are included herein say expenses on minor fault repairs and similar natured expenses; *
Running Expenses includes:
*
Lease charges paid in case if aircraft is taken on Financial Lease. *
Expenses on aviation fuel used for running the Aircraft(s) *
Insurance premia paid on such Aircraft(s). *
Rent paid towards Airport Tarmac/ Hangar (parking area) for Aircraft(s). *
Interest on any loan taken for purchase of Aircraft(s). *
Salary paid to Pilot and Cabin Crew (if any) and related costs.
*
Maintenance Expenses of Aircraft(s) includes periodic Aircraft servicing and other similar natured expenses; *
Depreciation calculated as per Section 32 of the Income Tax Act’ 1961 will be taken as Fringe Benefits and taxed here only in case where depreciation is being claimed as a deductible expenditure under section 32 in the computation of taxable income of the employer.
Valuation of fringe benefits:
20% of total expenditure incurred as defined above shall be the value of Fringe Benefits chargeable to tax under this clause of Section 115WB (2)(I).
Exceptions to the above rule of valuation of fringe benefits:
The above rule of 20 % of total expenditure incurred as value of Fringe Benefits shall be taken as NIL in the case of an Employer engaged in the employer engaged in carriage of passengers or goods by Aircraft.
PLEASE NOTE:
*
The above classification is only for broad purpose and should not be taken as strict boundaries for inclusion or exclusion of expenses incurred by an employer. The basic idea lies in the fact that expenses on Aircraft(s) be classified into these categories as per their nature and proximate purpose of incurring them.
CAclubindia
