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FBT on Vehicle Hire Charges

CA RAVIKUMAR R. C. (CA) (38 Points)

02 September 2007

Dear all

Please let me know wether FBT will be applicable on following expenditure

"Charges paid on Vehicle heired for the purposes of droping employees"

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16 Replies

MAHENDRA IYER (SERVICE) (315 Points)
Replied 03 September 2007

Question no 82 of CBDT's circular no. 8/2005 dt 29/08/2005 states rent paid or payable for an operating lease of a motor car would be treated as expenditure within scope of clause H of sub-section 2 of section 115WB. Hence in your case FBT will become applicable.

Nalam Ravindranath (78 Points)
Replied 03 September 2007

Now the expenditure incurred on providing free or subsidised transportation of employees from their residence to place of work and vice versa is out of FBT ambit

ca.Ashish goenka (profession) (92 Points)
Replied 03 September 2007

ambit of levy of fbt is very clear if such expenses are taxable in employees hands then fbt is not leviable but expenses mention by u are not taxable in employees hand so fall in ambit of fbt

ca.Ashish goenka (profession) (92 Points)
Replied 03 September 2007

ambit of levy of fbt is very clear if such expenses are taxable in employees hands then fbt is not leviable but expenses mention by u are not taxable in employees hand so fall in ambit of fbt

Nalam Ravindranath (78 Points)
Replied 03 September 2007

Mr Ashish. If you read the notes on clauses to the Finance Bill and the memorandum explaining the provisions in the finance bill, taxing this item of expenditure does not seem to be the intention of the legislature. Notes on clauses reads like this "it is proposed to amend the said sub-section --------so the provide that any benefit or amenity in the nature of free or subsidized transport or any such allowance provided by the employer to his employees for the journeys -----------------, shall not form part of fringe benefits. memo. explaining the provisions also used the similar words. Hence I feel provisions of FBT do not apply to this head of expenditure, even if it not taxed in the hands of employees. Please comment