FBT Exps. Disallowed

The expenses disallowed by AO shall not be considered for computation of Fringe Benefits....Only the amount allowed by AO shall be chargeable to FBT...

Yes Ashish goyal is right

correct answer

CORRECT ANS. SEE CIRCULAR OF FBT

Very simple..

There are some expenses (employee benefit related) in the organisation which will be under the perview of FBT. So if any expenses will be considered under FBT value then it will not be treated taxable in the hand of concerned employee like mobile bill reimbursement, conveyance etc and in this case oganisation need to pay FBtax accordingly. On the other hand if that expenses (employee benefit related) will not be considered under FBT then concerned employee will be taxable for that expenses like salary, medical or other CTC factors.

Here AO has disallowed some expenses and added (20% of that) with partners income so that amount (100% of such expenses) will not be considered in FBT. Organisation will not pay FBtax on that because employee will be taxable for that amount now.

If Expenses is Rs 1000.00. Suppose AO has added 20% of Rs 1000 = Rs 200.00 with the income of Partners. So Rs 1000.00 will not be considered in FBT and Organisation will not pay FBtax on Rs 1000.00. Partner will be taxable for Rs 200.00 only.