FBT

FRINGE BENEFITS TAX

FBT stands for 'Fringe Benefits Tax' and it was introduced as part of Finance Act in 2005 as an additional income-tax and came which apply on an employer when it provides additional facility to its employee except for salary. 


FEATURES OF FBT

1. Fringe Benefits Tax should be pay by an employer.

2. Fringe Benefit Tax is an example of direct tax.

3. An employer has to pay Fringe Benefit on the total income.

EMPLOYER CATEGORIES  

Artificial Juridical Person

Association of Persons

Body of individuals

Firms/ Domestic Companies

Local Authority

Non – Domestic Companies


BENEFITS LIST

Entertainment

Hospitality

Conference

Sales promotion including publicity

Employee welfare

Conveyance, tours and travel

Hotel, boarding, lodging

Repair, running and maintenance of cars

Repair, running and maintenance of aircraft

Use of telephone

Festival celebrations

Health Club

Any other club

Gifts

FBT ACTIVATION STEPS IN TALLY ERP-9
1. Open an already existing company

2. Press “F11” key.

3. Select the “Statutory & Taxation”

4. Now make yes to the following options.

           Enable Fringe Benefit Tax (FBT)

           Set/Alter FBT Details

FBT LEDGER

Ledger name: Conveyance a/c

Group: Indirect Expenses

Is FBT Applicable: Yes

FBT Category: Conveyance

FBT VOUCHER ENTRY

Voucher name: Payment Voucher

Debit: Conveyance a/c

Credit: Cash a/c or Bank a/c

FBT REPORT

1. Click on “Display”

2. Click on “Statutory Info.”

3. Now select “FBT Assessee Type” or “FBT Category”

FBT EXERCISE

Company Name: Ritesh Hardware & Electronics

Inventory items

Stock items	Brand/Company	Quantity	Price	Sales Price
Watch	Titan	100	6500	7,000
Processor	Intel	160	4000	4,500
Locks	Harison	200	750	800
Brush	Paint	150	120	160
Cabinet	Adcom	60	1200	1400

Ledger Entries

Cash in hand Rs. 5,00,000

Cash in bank Rs. 4,50,000

Voucher Entries

1.   Sold goods by cash (2 Watches, 10 Locks)

2.  Return defected goods (2 Locks)

3.  Paid entertainment expenses Rs. 7,000 with FBT

4.  Purchase goods by discount 4% (10 Processors, 10 watches)

5.  Receive commission Rs. 15,000

6.  Paid conveyance charges Rs. 15,000 with FBT

7.  Withdraw cash Rs. 2,50,000 from bank to office use.

8.  Sold goods for cash (2 watches with 20% VAT & 3 Processor with 5%)

9.  Purchase goods on credit (20 Brush with 12.5 VAT & Cabinet 5%)

10. Sold goods by cash (50 Brush) with 2% CST

11. Paid office rent Rs. 25,000 by cheque

12. Paid manager’s telephone bill amount Rs. 6,500 with FBT