Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Fringe benefit tax

Save Share

This query is : Resolved

venkithari (Querist)
Follow

30 August 2007 An assessee has incurred car expenses of Rs.40000/- in cash and disallowance is made as per the provisions of Sec40A(3).
Should FBT be paid on this amount or not?

Experts opinion is sought.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
Follow

31 August 2007 Disallowance made on the ground that expenditure is not genuine and accepted , means expenditure was never incurred , which means no FBT.

But in case of 40(A)(3), it is added back only on the ground of cash payment ......incurring of expenditure is not under cloud.

Another angle is this that FBT is for the deemed benefit to employees, which otherwise the employee should have paid tax . Such benefit does not become non existent , only because cash payment is made.

Therefore, in my opinion , FBT will be payable even after disallowance under section 40(A)(3).

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!