FBT ON CAPITAL EXPENDITURE

FBT is payable in the year in which the expenditure as referred to in clauses (A) to (P) of Sec.115WB(2), is incurred irrespective of whether the expenditure is capitalized or not. However, the same expenditure will not be liable to FBT again in the year in which it is amortized and charged to profit.

Mr.C.A.Ashok Shah is absolutely right. FBT is payable on all expenditure whether Revenue or Capital.

Dear Sir,

If I understand the query correctly Mr. Jain wanted to ask if we capitalise the expenses of travelling in the Project Cost which will ultimately form part of Gross Block Asset (for example Building) on which company will be claiming depriciation in the coming years, will the expenditure attract FBT. Mr. Shah has replied the query covering the same under question no. 19 of Circular No. 8/2005, however as per question no. 89 of the same circular "Expenditure on any capital asset in respect of which depriciation is allowable u/s 32 of IT Act does not fall within the scope of subsection (2) of section 115WB.

Request for some more guidance on the subject. 

hello sir,

if we read the FAQ 89 then it deals SPecifically with exp on assets on which DEPR. under sec 32 is allowed under income tax act but FAQ 19 speaks about all exp generally which are capitalized... so if we take the specific sense over general sense then we can conclude  that if  exp is incurred on assets on which depr is allowed under income tax act then FBT to be levied on depr. amount o'wise they will be covered by FAQ 19.and FBT will be charged in current year....

 And i would like to know your opinion if  you have different point of view.

Dear Mr. Sunny

Thanx for your inputs, however I am confused a bit:

First, you have said "that if  exp is incurred on assets on which depr is allowed under income tax act then FBT to be levied on depr. amount o'wise they will be covered by FAQ 19.and FBT will be charged in current year...." here I am not able to find where the same has been mentioned that If depriciation is allowed that FBT will be charged on Depriciation. Answer to the refered FAQ says FBT will not be levied in case expense is capitalised. As I am not able to trace any other case than depriciation on Motor Vehicle or Aircraft. Please guide me on this. 

Second FAQ 19 talks about expense either Amortised or charged to profit where in case we capitalise an expense in a project it is very difficult to find out the exact depriciation on that amount, still if we able to work that out FBT are we trying to say that FBT will be charged on that amount as per I. Tax Act.

Please guide with some referance.

Yes...FBT is payable on capital expenditure.