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FBT oN new R.C of car

A learner (Corporate Accounts ) (345 Points)

12 March 2009

hello all,

Can you help me in the given case::

say company is having a car registered in haryana and now car is transferred to one of company's branch in some other state say. andhra pradesh... and company paid expenses in that state to get NEW R.C.... are these expenses liable to F.B.T under clause repair and maintenance?

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6 Replies

LAXMIKANT JAIPURKAR (Practicing Company Secretary/Tax Consultant) (403 Points)
Replied 12 March 2009

FBT will not be applicable on Regn.Fee

umesh gupta (Chartered Accountant) (99 Points)
Replied 13 March 2009

Originally posted by :LAXMIKANT JAIPURKAR
"	FBT will not be applicable on Regn.Fee	"

Reg EXp sud be debited to Fixed asset a/c nd fbt sud br paid on dep.

A learner (Corporate Accounts ) (345 Points)
Replied 13 March 2009

Originally posted by :umesh gupta
"	Originally posted by :LAXMIKANT JAIPURKAR " FBT will not be applicable on Regn.Fee " Reg EXp sud be debited to Fixed asset a/c nd fbt sud br paid on dep.	"

Dear Sir,

I agree that REgn. exp should form part of cost of assets... but i think that is in the case when CO. buy a new asset but where asset is already in use in that case, will they not form part of maintenance? because here these exp dont add to productivity or efficiency of assets..... so i seek your expert opinion once again on this issue.....

Thanks & Rgds

umesh gupta (Chartered Accountant) (99 Points)
Replied 13 March 2009

hi,

u r correct that it is not for enhancing the productivity othe asset, but at the same time you shoud remember this it is a capital expenditure. it will give you enduring nature of advantage. without RC charges u can not even put to use your vehicle at a particular state.

thats why it shoud be debited to asset a/c.

gokul (Accountant) (126 Points)
Replied 16 March 2009

Iam not convinced that the expenditure on Regn is t be debited to assets a/c.

But to the other question whether the Regn Exp attracts FBT. I believe it falls within the ambit of FBT. It is like any other expenditure which is required for running the vehicle. The insurance for the car is a must for it to be used on the roads. Similarly Regn charges is also required for the car to be operated in a particular state. So I believe it falls within the category of "Running and maintenance ....."

You may please correct me if Iam wrong.