Adjustment of Advance Tax of Fringe Benefit Tax paid before its abolition – refund or adjustment allowed – CBDT
WE raised this on 10th July, 2009 and the CBDT has now clarified the issue. In our article FBT: Controversial in birth and controversial in death too! , we raised the question,
THE Finance Minister, Mr Pranab Mukherjee, proposes to guillotine the widely-disliked Fringe Benefit Tax (FBT). However, in their quick budget reactions the India Inc and the Sensex gave little credit to Dada. And now, there is a big question mark over whether India Inc will get the credit (refund) for the advance tax of FBT paid by June 15?
As per Finance Bill, 2009, the FBT is proposed to be abolished from April 1, 2010 (AY 2010-11). In other words, it is not leviable for the current fiscal. If that is so, the intent to refund the first quarter payment should have been there in the Bill. But the Bill is silent and the CBDT will have to now come out with a clarification or amendment of the provision in the Bill at the time of enactment towards the end of the current month. It is quite possible that the Govt may opt for adjustment of the same towards regular advance tax payment rather than any refund. Whatever it is, a clarification is the need of the hour to address the worries of the India Inc.
And now the Board clarifies,
However, during the current Financial Year 2009-10 some assessees have paid “advance tax in respect of fringe benefits” for Assessment Year 2010-11. In such cases the Board has decided that any installment of “advance tax paid in respect of fringe benefits” for A.Y. 2010-11 shall be treated as Advance Tax paid by assessee concerned for A.Y. 2010-11. The assessee can adjust such sum against its advance tax obligation in respect of income for A.Y. 2010-11 or in case of loss etc claim such payment as refund of advance tax paid in A.Y. 2010-11.
But who will pay interest? The lucky ones are those law breakers who did not pay the tax by June 15 anticipating that FBT would be abolished. Please see 23.07.2009.
Anyway the Nation should be grateful to CBDT for giving this clarification, issued much before the closure of the Financial Year, so that the FBT already paid but which was not payable could be adjusted.
CBDT Circular No. 2/2010 Dated: January 29, 2010