Interest on loan at concessional rate - perquisite or FBT?

Hi Meenakshi..

If u go by logic...if any perk is taxable in the hands of employee..then that allowance will not attract FBT...i am not aware of any judgement.....

I am not aware of any such judgment

Regards,

CA Ashish Ahuja, FCA
A Roaming Blogger and a CA
<a target='_blank' rel='nofollow' href="https://www.ahujaandahuja.in">Indian Chartered Accountant New Delhi India</a>
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Hi Meenakshi..

I got this information from net...

The Finance Act, 2005 has introduced a new Chapter in the IT Act, called the "Fringe Benefit Tax" (FBT). This tax is imposed on value of perquisites provided by employers to their employees. But with regard to FBT on interest free/concessional loans to employees, the FBT makes it clear that employer will not have any tax liability. For loans above Rs 20,000, the employees will be taxed under Income Tax Act.

Hope this clears ur doubt..

Hai!

  Thanks for your reply. but I am not fully convinced yet. The person who said the interest is to be taken as FBT quoted a supreme court ruling but he too doesnt have the exact ruling.  All  I can find in the net is a reference to a ruling given by the supreme court in the year 2000 and not the exact ruling. Can u pls help me in finding the ruling?

Hi Meenakshi,

It is very clear from the Act and Rules, that concession in interest in the matter of loan is perquisite.  It is taxable from employee's hand.  It is not taxable in the employer's hand as a FBT since it is taxable in the employee's hand as a perquisite.

Therefore it is perquisite item, which is taxable in the employee hand.

Hi,

Simple logic - If taxed in the hands of employee no FBT,

                          If taxed in the hands of employer FBT.

And regarding the judgement i have not heard of any such judgement.

Hope your doubt is clear.

Hi:

But as per the FAQ released from Income Tax Department on clarifications on FBT, i see a particular FAQ specific to a loan given for purchase of car is subjected to FBT.

 However, i will reconfirm with you this t'row. IF you have the FAQ on FBT given by IT Department in the mean time, please refer to it.

Regards

Srinivas

If property in joint name say SON & Mother. Son pays the EMI and claims interst benefit.

Now the son is also paying rent to the mother for 50% of her share in property. whether HRA benefit can be taken.

I think yes and good way of Tax Planning.