FBT ON PREPAID EXP.

FBT is payable on pre paid expenses also provided they are of the nature reffered U/s 115 WB(2) clauses A-Q. For example, a  company pays Rs. 1 Cr towards Group medical policy for its employees valid for a period of one year. For accounting purpose, the amount paid will be kept as pre paid and will be charged to PNL on month on month basis. But for FBT purpose,FBT will be paid on teh amount as this is liable to FBT U/s 115WB(2)(E).

As per CBDT Clarification on FAQ issued in 2005, FBT would be payable in the year in which the expenditure is incurred. Therefore, FBT would not be payable on payment of advance towards expenses to be incurred in the future. Based on this, we can take a stand that FBT is not to be paid on Prepaid expenses.