FBT is applicable on all type of expenses even on preoperative expenses. I just want to know what is the accountig treatment on FBT paid on preoperative expenses. Whether it should also be capitalised or should be shown below line. There are no specific guidelines available from ICAI in this regard. Can anyone reply Pls ?
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Accounting treatment on FBT on preoperative exp
Replies (5)
Pre-operative Expnses is considered for FBT Calculation.
Whether pre-operative expenses falling within the categories specified in section 115WB(2) would be covered in the scope of fringe benefits?
16. Any expenditure incurred for the purposes referred to in clauses (A) to (P) of sub-section (2) of section 115WB is liable to FBT irrespective of whether such expenditure is incurred prior to commencement of the business or thereafter.
Thanks for your reply, but I have already written in my question what you have replied. I want to clarify accounting treatment of FBT on preoperative exp whether it would be capitalised or would be shown on the face of PL Account
dear friend....
you already aware that income tax is not an admissible expense for calculation of taxable income u/s 40 a.U also a ware that preoperative(preliminary) expenses are admissible as an expense over a period of 5 years u/s 35 D.If we include FBT in preoperative expense , it should also be included for the purpose of deduction u/s 35 D which is a contravention of section40 a.
therefore it is advisable to showit below line.
| Originally posted by :Sarvesh Mani Tiwari | ||
| " |
Company: Home has director Tom and Tommy . CompanyTus has director Tom and Ali. When Tus was set up, Home help Tus to paid for $100k import of stock. So later Home biled Tus for the $100k. Tus is a supplier to Home where Home will take stock from Tus. Tom as a director of Tus will like to put in $75k as capital.This $75k will bo deduct from the 100k owing to Home. The remaining $25k will contra off with the invoice that Tus billed Home. I would like to ask how should i pass this entry for the $75K? |
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Well my friend you will have to capitalise fbt as per AS 10...as it clearly says any expenses/taxes are required to be capitalized.
On the other hand,in income tax fbt wold not be shown in fixed asset schedule.There would be a difference in addition among companies act fixed asset schedule and income tax,the diiference would be of fbt.
For any further queries,feel free to ask.
Thanks & Regards,
Shobhit Singhee
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