FBT In Tally 9

Implementation of FBT
in Tally.ERP 9

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Version: Implementation of FBT in Tally.ERP 9/1.0/June 2009

Contents

Contents
Introduction
Characteristics of FBT .............................................................................................................................. 1
Scope & Applicability .............................................................................................................................. 1
Meaning of Fringe Benefits ................................................................................................................................. 1
Meaning of Deemed Fringe Benefits ................................................................................................................... 2
Valuation of Fringe Benefits................................................................................................................................ 3
Rate of FBT .......................................................................................................................................................... 8
Features of FBT in Tally.ERP 9 ............................................................................................................... 9

Lesson 1: Configuring Tally.ERP 9 for FBT
1.1 Enabling FBT in Tally.ERP 9 ......................................................................................................... 10
1.2 FBT Statutory Info. ......................................................................................................................... 15
1.2.1 FBT Assessee Type .................................................................................................................................. 15
1.2.2 FBT Category .......................................................................................................................................... 16
1.3 Creating Masters ............................................................................................................................. 18
1.3.1 Expenses Ledger ...................................................................................................................................... 18
1.3.2 Fringe Benefit Tax Ledger ....................................................................................................................... 20
1.3.3 Bank Account ........................................................................................................................................... 21

Lesson 2: Transactions
2.1 FBT on Expenses - Payment Voucher ............................................................................................ 23
2.2 Accounting Expenses Subject to FBT ............................................................................................ 25
2.3 Expenses Partly Subject to FBT ..................................................................................................... 30
2.4 Accounting FBT on Depreciation ................................................................................................... 35
2.5 Adjustments in FBT........................................................................................................................ 38
2.5.1 Reversal of Excess FBT ........................................................................................................................... 38
2.5.2 Accounting for Recoveries from Employees ............................................................................................ 41
2.5.3 Accounting for Exemption on Expenses ................................................................................................. 47
2.6 Payment of FBT .............................................................................................................................. 51
2.6.1 Advance FBT Payment ............................................................................................................................ 52
2.6.2 Quarterly FBT Payment .......................................................................................................................... 56
2.6.3 Payment of Interest & Penalties .............................................................................................................. 62

Lesson 3: Reports
3.1 FBT Reports .................................................................................................................................... 66
3.1.1 FBT Computation (Category wise) Report .............................................................................................. 66
3.1.2 Ledgers of FBT Category Report ............................................................................................................ 70
3.2 FBT Statutory Returns .................................................................................................................... 72
3.2.1 ITR 8 ........................................................................................................................................................ 72

i

Introduction

Fringe Benefit Tax (FBT) was introduced by Finance Act, 2005 by insertion of chapter XII-H in the
Income Tax Act, 1961, containing sections 115W to 115WL. This provides for the levy of additional
income tax on fringe benefits offered by employers to their employees.

Characteristics of FBT
It is a tax on expenditure, not on income
It is a tax on employers, not on employees
It is a surrogate tax on employers
It is a tax on benefits enjoyed collectively by employees and cannot be attributed to individ-
ual employees
It is payable by the employer only if he has employees based in India
It is payable irrespective of whether the employer is liable to pay income tax on his total
income
It is in the nature of an additional income tax

Scope & Applicability
FBT is levied on an employer who provides fringe benefits or deemed fringe benefits to an
employee. These benefits are not chargeable to tax in the hands of the employee.
Section 115WA provides that in addition to the income tax charged under the Act, there shall be
an additional income tax charged for every assessment year commencing on or after the 1st day
of April 2006. This is in respect of the fringe benefits provided or deemed to have been provided
by an employer to his employees during the previous year, at the rate of 30% on the value of such
fringe benefits.

Meaning of Fringe Benefits
Section 115WB(1) defines fringe benefits to mean:
A. Any privilege, service, facility or amenity directly or indirectly provided by an employer to his
employees (including former employees) by reason of their employment. It also includes reim-

1

Introduction

bursements, made by the employer either directly or indirectly to the employees for any pur-
pose
B. Any free or concessional tickets provided by the employer for private journeys undertaken by
the employees or their family members
C. Contributions by the employer to an approved superannuation fund
D. Any specified security or sweat equity shares allotted or transferred, directly or indirectly, by
the employer free of cost or at concessional rate to his employees (including former employee
or employees). [This clause is inserted by Finance Act, 2007 with effect from 01/04/2008]

Meaning of Deemed Fringe Benefits
Sub-Section (2) of section 115WB provides that fringe benefits shall be deemed to have been
provided if the employer has, in the course of his business or profession (including any activity
whether or not such activity is carried on with the object of deriving income, profits or gains),
incurred any expense on or made any payment for the following purposes, namely:
A. Entertainment
B. Provision of hospitality of every kind to any person, whether by way of food or beverages or in
any other manner excluding food or beverages provided to the employees in the office or fac-
tory or non-transferable paid vouchers usable only at eating joints or outlets
C. Conference, excluding fee for participation by the employees in any conference
D. Sales promotion, including publicity but excluding specified expenditure on advertisement
E. Employee welfare, excluding any expenditure or payment made to fulfill any statutory
obliga¬tions or mitigate occupational hazards or provide first aid facilities in the hospital or dis-
pensary run by the employer
F. Conveyance
G. Use of hotel, boarding and lodging facilities
H. Repair, running (including fuel) and maintenance of motorcars and the amount of depreciation
thereon
I. Repair, running (including fuel) and maintenance of aircrafts and the amount of depreciation
thereon
J. Use of telephone (including mobile phone) other than expenditure on leased telephone lines
K. Maintenance of any accommodation in the nature of guest house other than accommodation
used for training purposes
L. Festival celebrations
M. Use of health club and similar facilities
N. Use of any other club facilities
O. Gifts
P. Scholarships
Q. Tour and travel (including foreign travel)

The major distinction between fringe benefits and deemed fringe benefits is that fringe benefits
are subject to FBT only when provided to an employee or his family members, whereas deemed
fringe benefits are taxable, irrespective of whom they are provided to.

2

Introduction

Valuation of Fringe Benefits
Section 115WC provides the valuation mechanism for fringe benefits and deemed fringe benefits.
No valuation mechanism has been provided for fringe benefits under 115WB(1)(a) and in respect
of benefits under 115WB(1)(b), 115WB(1)(c) & 115WB(1)(d), the full value of fringe benefits are
liable to FBT.
The fringe benefits in respect of free tickets and concessional tickets are applicable only to those
employers who are engaged in the business of carriage of passengers or goods i.e., airlines,
shipping companies, tourist bus/ taxi operators, and so on. The value charged to the public as
reduced by the amount recovered from the employee is the value of the fringe benefit. The fringe
benefits in respect of contributions to superannuation fund are applicable on amounts exceeding
one lakh rupees in case of each employee.
The value of fringe benefits under 115WB(1)(d) is the fair market value* of the specified security
or sweat equity shares on the date on which the option** vests with the employee as reduced by
the amount actually paid by, or recovered from, the employee in respect of such security or
shares [This is inserted by the Finance Act 2007, with effect from 01/04/08].

Table showing valuation of Fringe Benefits

Nature of Fringe Benefits Section Rate
Any free or concession ticket provided by the employer for private 115WB(1)(b) 100%
journeys of the employees or their family members
Any contribution by the employer to an approved superannuation 115WB(1)(c) 100%
fund for employees
Any specified security or sweat equity shares allotted or transferred, 115WB(1)(d) 100%
directly or indirectly, by the employer free of cost or at concessional
rate to his employees (including former employee or employees).
Provision of Service, Facility Or Amenity to Employee 115WB(1)(A) 100%

3

Introduction

Table showing valuation of Deemed Fringe Benefits

Sl.No. Nature of Fringe Benefits Section Rate
1. Conference 115WB(2)(C) 20%
2. Conveyance 115WB(2)(F) 20%
3. Employees’ Welfare 115WB(2)(E) 20%
4. Entertainment 115WB(2)(A) 20%
5. Festival Celebrations 115WB(2)(L) 50%
6. Gift 115WB(2)(O) 50%
7. Hotel, Boarding, Lodging 115WB(2)(G) 20%
8. Maintenance of Guest House 115WB(2)(K) 20%
9. Provision of Hospitality of Every Kind 115WB(2)(B) 20%
10. Repair, Running and Maintenance of Aircrafts 115WB(2)(I) 20%
11. Repair, Running and Maintenance of Cars 115WB(2)(H) 20%
12. Sales Promotion Including Publicity 115WB(2)(D) 20%
13. Scholarship 115WB(2)(P) 50%
14. Tour and Travel (including foreign travel) 115WB(2)(Q) 5%
15. Use of Health Club and Similar Facilities 115WB(2)(M) 50%
16. Use of Other Club Facilities 115WB(2)(N) 50%
17. Use of Telephone 115WB(2)(J) 20%

In addition to the above classification, some segments of the industry have been given conces-
sional rates of valuation, having regard to the nature of their business as shown:

4

Introduction

Manufacture/Production

Carriage of passengers


Construction business
or goods by motor car

of computer software

of pharmaceuticals
or goods by aircraft
passenger carriage
In the business of
Group under the
FBT Provision

Any other
Section

Hotel
115WB Any Free 100% will be will be will be will be will be will be will be
(1)(b) or conces- taxed taxed taxed taxed taxed taxed taxed
sional under under under under under under under
ticket pro- Section Section Section Section Section Section Section
vided by 115 WB 115 WB 115 WB 115 WB 115 WB 115 WB 115 WB
the (2) (F) (2) (F) (2) (F) (2) (F) (2) (F) (2)(F) (2)(F)
employer i.e. 20% i.e. 20% i.e. 20% i.e. 20% i.e. 20% i.e. 20%
for private
journeys of
his
employee
or their
family
members
115WB Any contri- 100% 100% 100% 100% 100% 100% 100% 100%
(1)(c) bution by
the
employer
to an
approved
supperan-
nuation
fund for
employees
115WB Any 100% 100% 100% 100% 100% 100% 100% 100%
(1)(d) specified
security or
sweat
equity
shares
allotted or
trans-
ferred,
directly or
indirectly,
by the
employer
free of cost
or at con-
cessional
rate to his
employees
(including
former
employee
or employ-
ees)

5

Introduction






of pharmaceuticals
passenger carriage
In the business of
Group under the
FBT Provision

Any other
Section

Hotel
115WB Entertainment 20% 20% 20% 20% 20% 20% 20% 20%
(2)(A)

115WB Provision of hospitality of every kind by 20% 5% 20% 20% 20% 20% 5% 20%
(2)(B) the employer to any person, whether by
way of provision of food or beverages or
in any other manner whatsoever and
whether or not such provision is made by
reason of any express or implied contract
or custom or usage of trade but does not
includes
i) any expenditure on, or payment for,
food or beverages provided by the
employer to his employees in office or
factory;
(ii) any expenditure on or payment
through paid vouchers which are not
transferable and usable only at eating
joints or outlets;
115WB conference (other than fee for participa- 20% 20% 20% 20% 20% 20% 20% 20%
(2)(C) tion by the employees in any conference).
For the purpose of this clause, any
expenditure on conveyance, tour and
travel (including foreign travel), on hotel,
or boarding and lodging in connection
with any conference shall be deemed to
be expenditure incurred for the purposes
of conference;

6

Introduction






of pharmaceuticals
passenger Carriage
In the business of
Group under the
FBT Provision

Any other
Section

Hotel
115WB Sales promotion including publicity: Pro- 20% 20% 20% 20% 20% 20% 20% 20%
(2)(D) vided that any expenditure on advertise-
ment:
(i) being the expenditure (including
rental) on advertisement of any form in
any print (including journal, catalogues or
price lists) or electronic media or trans-
port system
(ii) being the expenditure on the holding
of, or the participation in, any press con-
ference or business convention, fair or
exhibition;
(iii) being the expenditure on sponsor-
ship of any sports event or any other
event organised by any Government
agency or trade association or body;
(iv) being the expenditure on the publica-
tion in any print or electronic media of
any notice required to be published by or
under any law or by an order of a court
115WB Employees' welfare — For the purpose 20% 20% 20% 20% 20% 20% 20% 20%
(2)(E) of this clause, any expenditure incurred
or payment made to fulfil any statutory
obligation or mitigate occupational
hazards or provide first aid facilities in
the hospital or dispensary run by the
employer shall not be considered as
expenditure for employee's welfare;
115WB Conveyance 20% 20% 20% 5% 5% 5% 20% 20%
(2)(F)
115WB Use of hotel, boarding and lodging facili- 20% 5% 20% 20% 5% 5% 20% 20%
(2)(G) ties
115WB Repair, running (including fuel), mainte- 20% 20% 5% 20% 20% 20% 20% 20%
(2)(H) nance of motor cars and the amount of
depreciation thereon;
115WB Repair, running (including fuel) and 20% 0% 20% 20% 20% 20% 20% 20%
(2)(I) maintenance of aircrafts and the amount
of depreciation thereon;
115WB Use of telephone (including mobile 20% 20% 20% 20% 20% 20% 20% 20%
(2)(j) phone) other than expenditure on leased
telephone lines;
115WB Maintenance of any accommodation in 20% 20% 20% 20% 20% 20% 20% 20%
(2)(K) the nature of guest house other than
accommodation used for training pur-
poses

7

Introduction






of pharmaceuticals
passenger Carriage
In the business of
Group under the
FBT Provision

Any other
Section

Hotel
115WB Festival celebrations 50% 50% 50% 50% 50% 50% 50% 50%
(2)(L)
115WB Use of health club and similar 50% 50% 50% 50% 50% 50% 50% 50%
(2)(M) facilities
115WB Use of any other club facilities 50% 50% 50% 50% 50% 50% 50% 50%
(2)(N)
115WB Gifts 50% 50% 50% 50% 50% 50% 50% 50%
(2)(O)
115WB Scholarships 50% 50% 50% 50% 50% 50% 50% 50%
(2)(P)
115WB Tour and Travel (Including 5% 5% 5% 5% 5% 5% 5% 5%
(2)(Q) foreign travel)

Rate of FBT
The following are the rates of tax for different categories of employers:
Category of Tax Rate Surcharge Education Cess Higher Effective
Employer of FBT Educ. Rate of FBT
Cess
Firms/ Domestic 30% 10% 2% 1% 34.00%
Companies/ AJPs
Non-Domestic 30% 2.5% 2% 1% 31.68%
Companies
Local Authority 30% 0% 2% 1% 30.91%

AOP/BOI Whose 30% 0% 2% 1% 30.91%
total income does
not exceed
Rs.10,00,000
AOP/BOI whose 30% 10% 2% 1% 34.00%
total income
exceeds
Rs.10,00,000

8

Introduction

Features of FBT in Tally.ERP 9
The FBT module integrated with Tally.ERP 9 takes care of all fringe benefits transactions and
automatically computes the FBT amount payable to the government. The user can also view and
generate various FBT challans, computation reports, outstanding statements and other related
reports when required.

The FBT features in Tally.ERP 9, help in eliminating possibilities of errors during data entry and
reduces incorrect remittances and also facilitates payment of penalties.

The FBT functionality in Tally.ERP 9 has the following features:
It is simple and user-friendly
It is quick and easy to set up and use
Allows FBT and Non-FBT ledgers in the same voucher
Allows auto and manual calculation of FBT amount
Facilitates payment of advance tax, tax on regular assessment and self assessment tax
Supports transactions involving interest, penalties & others
Generates FBT Challan and other FBT related reports
Tracks bill-wise (bill-by-bill) details, automatically calculates FBT payable and adjusts any
advance tax or recoveries made and also provides flexibility to make adjustments later
Allows challan management and printing to ensure prompt and accurate filing of tax
The auto helper feature prevents erroneous data inputs and expedites voucher entry

9

Lesson 1: Configuring Tally.ERP 9 for FBT

The FBT module integrated with Tally.ERP 9 takes care of all fringe benefits transactions and
automatically computes the FBT amount payable to the government. The user can also view and
generate various FBT challans, computation reports, outstanding statements and other related
reports when required.
The FBT features in Tally.ERP 9, help in eliminating possibilities of errors during data entry and
reduces incorrect remittances and also facilitates payment of penalties.

1.1 Enabling FBT in Tally.ERP 9
It takes a one-time configuration in Tally.ERP 9 for FBT features to be activated. Follow the steps
given below to enable FBT in Tally.ERP 9 for a new company, M/s. Coramandel Industries (P)
Ltd.

M/s. Coramandel Industries (P) Ltd. is a domestic company, which manufactures cement and
other waterproofing components.

Step 1: Create Company

In the Company Creation Screen,
Specify Coramandel Industries (P) Ltd. as the Company Name and Address details
Select India in the Statutory Compliance for field
Specify the State, Pin code & Accounts with or without Inventory details

10

Configuring Tally.ERP 9 for FBT

The completed Company Creation screen is displayed as shown.

Figure 1.1 Company Creation Screen

Press Enter to Accept

11


Step 2: Press F11: Statutory & Taxation

Set Enable Fringe Benefit Tax (FBT) to Yes
Enable Set/Alter FBT Details to Yes and press Enter

Figure 1.2 Statutory & Taxation Features screen

12


Step 3: Enter Company FBT Assessee Details
Enter PAN / Income Tax Number details of the company
Select the Assessee Type as Firms/ Domestic Companies

Figure 1.3 Company FBT Assessee Details

Set Is Surcharge Applicable to Yes

Surcharge is applicable to all the assesses except Local Authorities.

Select Assessee Type as Others from the List of Assessee Category (in the case of
businesses engaged in any of the trades mentioned in the drop down list, select the rele-
vant Assessee Category) and press Enter

13


Figure 1.4 Company FBT Assesse Category

The completed F3: Statutory & Taxation Features screen is displayed as shown.

Figure 1.5 F3: Statutory & Taxation Features Screen

Press Enter to accept the F3: Statutory & Taxation Features screen

14


1.2 FBT Statutory Info.
The Statutory Masters containing various FBT categories, Rate of FBT and Assessable percent-
age of fringe benefits are automatically loaded soon after enabling FBT in Tally.ERP 9.

For the Statutory Masters, the following details are preset as per Income Tax Laws:
Date of Applicability
Rate of FBT
Surcharge
Addl. Surcharge (Cess)
Addl. Education (Cess)

1.2.1 FBT Assessee Type
To view predefined FBT Assessee Types masters in Tally.ERP 9:
Go to Gateway of Tally > Display > Statutory Info. > FBT Assessee Type

Figure 1.6 FBT Assessee Type

15


Select Artificial Juridical Person from the list of Assessee Type and press Enter

Figure 1.7 FBT Assessee Type – Artificial Juridical Person

1.2.2 FBT Category
To view predefined FBT Category masters in Tally.ERP 9:
Go to Gateway of Tally > Display > Statutory Info. > FBT Category

Figure 1.8 FBT Category Display

16


Select Conference as FBT Category from the List of FBT Categories and press Enter

Figure 1.9 FBT Category Display - Conference

17


1.3 Creating Masters
Once you have enabled the company for FBT, create necessary ledgers such as Expenses
ledger, Party ledgers and FBT ledger masters.

1.3.1 Expenses Ledger

Ledger Under Inventory Values Is FBT Default FBT
are affected applicable? Category
Conveyance Indirect Expenses No Yes Conveyance

Separate ledgers for Surcharge, Education Cess and Higher Education Cess
are not required, as Tally.ERP 9 automatically calculates Surcharge,
Education Cess and higher education cess on the basic tax.

To create a Conveyance ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

In the Ledger Creation Screen,
Type Conveyance as the Ledger Name
Group it under Indirect Expenses group
Set Inventory values are affected to No
Set Is FBT Applicable to Yes
Select Conveyance as FBT Category from the List of FBT Categories

18


Figure 1.10 FBT Category Selection

Set Allow Exemption Amount in Vouchers to No
The completed Ledger Creation screen is displayed as shown.

Figure 1.11 Completed Ledger Creation Screen

Press Enter to Accept.

19


The option, Is FBT Applicable, is available to enter FBT details for those
ledgers grouped under Direct, Indirect Expenses, Fixed Assets, Misc.
Expenses (Assets) & Sub Groups. The ledgers created under Fixed
Assets group are used for computing FBT on Operating & Financial costs
(viz., repair, running and maintenance expenses such as lease rentals, fuel,
driver salary, interest on Loans & Depreciation etc., on motor cars and air-
crafts).

1.3.2 Fringe Benefit Tax Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create
Ledger Under Type of Duty/Tax Inventory Values
are affected
FBT Payable Duties & Taxes FBT No
In the Ledger Creation screen,
Type the FBT Payable as the Ledger Name
Select the group Duties & Taxes in the field Under
Select FBT in the field Type of Duty/Tax

Figure 1.12 Type of Duty/Tax Selection

20


The completed FBT Payable ledger creation screen is displayed as shown.

Figure 1.13 FBT Payable Ledger Creation

Press Enter to Accept

1.3.3 Bank Account

Go to Gateway of Tally > Accounts Info > Ledgers > Create

Ledger Under Effective Date for Opening Balance
Reconciliation
HDFC Bank Bank Accounts 1-04-2008 Rs. 20,00,000

In the Ledger Creation screen
Type the HDFC Bank as the Ledger Name
Select the group Bank Accounts in the field Under
Under Mailing Details enter Address, State, PIN Code, A/c No. Branch Name and BSR
Code of the Bank.

21


Enter Rs. 20,00,000 in the Opening Balance field

Figure 1.14 Completed Bank Ledger creation Screen

22

Lesson 2: Transactions

The expenditure is liable to FBT when incurred and not when charged off to Profit & Loss A/c. In
Tally.ERP 9, you can account for expenses implying FBT with the help of payment voucher,
Journal Voucher or Purchase Voucher, as required. Consider the following scenarios to exemplify
FBT in Tally.ERP 9.

2.1 FBT on Expenses - Payment Voucher
Example 1:
On 11th April, 2008, M/s. Coramandel Industries reimbursed Rs. 5,400/- to Mr. Ashok (Sr.
Manager – Sales) towards Conveyance expenses vide Ch. No. 015479.

The same is accounted through a payment voucher, as shown.

Create a Payment Voucher
Go to Gateway of Tally > Accounting Vouchers > F5: Payment Voucher

Set Up
In F12: Configure (Payment Configuration)
Set Use Single Entry mode for Pymt/Rcpt/Contra to Yes

1. Press F2 and change date to 11-04-2008
2. Select HDFC Bank in the Account field
3. Select Conveyance in the Particulars column and press Enter
4. Enter 5400 in the Amount field
5. Enter the Cheque No. and details of the transaction in the Narration field

23

Transactions

The completed Expenses Payment Voucher is displayed as shown.

Figure 2.1 Payment Voucher Screen

6. Press Enter to Accept

The FBT calculations are automatically done in Tally.ERP 9, based on the FBT categories defined
in the ledger masters.

Tally.ERP 9 also allows you to pass the above voucher in double entry mode.

24

Transactions

FBT Computation
To view the Fringe Benefit Tax details
Go to Gateway of Tally > Display > Statutory Reports > FBT Reports > FBT Computation

Figure 2.2 FBT Computation Report

The FBT payable is computed automatically based on the predefined FBT Classifications, at the
prescribed rates on the assessable value of fringe benefits out of the total amount of fringe
benefits paid.

2.2 Accounting Expenses Subject to FBT
Example 2:
On 16th April, 2008, Dynamic Cable Network submitted a bill (No. 432) for Rs. 2,250/- towards
satellite television services rendered by them. Coramandel Industries issued a cheque (vide no.
015499) on the same day.

The following example illustrates FBT transaction using a Journal Voucher. Before passing the
Journal Voucher, create the following ledgers.

25

Transactions

Journal voucher is generally used to record transactions on due basis i.e.,
firstly a due entry in favour of the party is created when the bill is received and
then at the time of settlement of the referred bill, a payment entry is passed.

Expense Ledger Accounts
Entertainment Indirect Expenses No Yes Not Applicable
Expenses

Party Ledgers
Ledger Under Maintain Balances Inventory Values
bill-by-bill are affected
Dynamic Cable Network Sundry Creditors Yes No
Enter the Mailing Details and Tax Information

Setup:
In F12: Configure (Journal Configuration)
Set Allow selection of FBT Category during entry to Yes

Figure 2.3 Journal Configurations

26

Transactions

Create Journal Voucher
Go to Gateway of Tally > Accounting Vouchers > F7: Journal Voucher
2. Select Entertainment Expenses in the field Debit and press Enter

The FBT Category selection screen is displayed as shown.

Figure 2.4 FBT Category selection

When Allow selection of FBT category during entry is set to Yes in F12:
Voucher Entry Configuration, Tally.ERP 9 facilitates Assigning/ Altering of
FBT categories during voucher entry.

3. Select Entertainment as the FBT Category from the List of FBT Categories

27

Transactions

4. Enter 2250 in the Amount field
5. Select Dynamic Cable Network in the Credit field
6. In the Bill–wise Details screen,
Specify the Type of Ref as New Ref
Name as 432 and press Enter
7. Enter the transaction details in the Narration field

The completed Journal Voucher is displayed as shown.

Figure 2.5 Journal Voucher screen


To record the payment made to M/s. Dynamic Satellite Network, pass a Payment Entry for the
amount paid.

28

Transactions

The completed Payment Voucher is displayed as shown

Figure 2.6 Completed Payment Voucher Screen

FBT Computation
To view the Fringe Benefit Tax details


29

Transactions

2.3 Expenses Partly Subject to FBT
In the event, where a part of the expenditure is not subject to FBT and the balance amount which
is subject to FBT (Expenses incurred in respect of benefits offered to employees), it is crucial to
determine the accurate value of expenses for computation of FBT.
Tally.ERP 9 provides the flexibility to enter information in the same voucher using a single
expense ledger. Consider the following scenario to illustrate the Expenses Partly Subject to FBT.

Example 3:
On 20th April, 2008, M/s. Coramandel Industries received a bill (vide no. 537) from Krishna Petro
Industries for Rs. 10,000/- towards fuel charges for the following purposes:
Company Cab — Rs. 4,000/-
Industrial Fuel — Rs. 6,000/-

The following example illustrates FBT transaction using a Purchase Voucher. Before passing the
Voucher, create the following required ledgers.

Expenses Ledger Account
Fuel Charges Direct Expenses No Yes Not Applicable

Party Ledger
Ledger Under Maintain Balances Inventory Values
bill-by-bill are affected
Krishna Petro Industries Sundry Creditors Yes No
Enter the Mailing Details and Tax Information

Create Purchase Voucher
Setup:
In F12: Configure (Purchase Invoice Configuration)
Ensure that Allow selection of FBT Category during entry is set to Yes
Set Use Common Ledger A/c for Item Allocation to No

30

Transactions

Figure 2.8 Purchase Invoice Configuration

Go to Gateway of Tally > Accounting Vouchers > press F9: Purchase (Account Invocie
Mode)

2. Press Alt + I: Account Invoice
3. Type 537 in the Ref field
4. Select Krishna Petro Industries in Party’s A/c Name
5. Select Fuel Charges in Particulars column and press Enter. The FBT Category dis-
plays as Not Applicable as it has not been defined during ledger creation
6. Select Repair, Running & Maintenance of Motor Cars from the List of FBT Cate-
gories

31

Transactions

Figure 2.9 FBT Category Selection

7. Enter Rs. 4000 in the Amount field
8. Select Fuel Charges again in Particulars column and Press enter to view FBT Cate-
gory screen.

Figure 2.10 Fuel Charges Ledger Selection

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The LIst of FBT Categories screen is displayed as shown.

Figure 2.11 FBT Category selection

9. Press Enter to Accept the FBT category as Not Applicable
10. Press Enter to skip the Rate field
12. In the Bill–wise Details screen accept the default bill allocation

33

Transactions

The completed Purchase Voucher is displayed as shown.

Figure 2.12 Completed Purchase Voucher

FBT Computation
To View the FBT Details

Figure 2.13 FBT Computation

34

Transactions

2.4 Accounting FBT on Depreciation
As per the provisions of Chapter XII H of the Income Tax Act, 1961, the expenditure on running
and maintenance of cars includes lease rentals (both financial and operating), depreciation on
cars under the income-tax law, fuel, driver’s salary, parking charges and also interest on loans for
cars.
In Tally.ERP 9, the user can account for FBT on operating and financial costs as and when
charged off to the Profit & Loss A/c but however expenses such as depreciation, which are
generally calculated at the end of financial year for tax purposes, are required to be recorded
through an optional voucher viz., Memorandum voucher (which does not affect Accounting or
Inventory records) to compute FBT on such expenses. Consider the following example to illus-
trate the same.

Example 4:
As per the Income Tax Act, depreciation @ 15% is chargeable on Motor Car. For the purpose of
Fringe Benefit Tax, M/s. Coramandel Industries accounted for Depreciation on Motor Car @ 15%
for the quarter ending 30th June 2008.

The same is accounted for by passing a Memorandum Voucher as shown. Before passing the
Voucher, create the following ledgers.

Fixed Assets Ledger

Ledger Under Inventory Values Is FBT Opening Balance
are affected applicable?
Motor Car Fixed Assets No No Rs. 5,00,000

Expenses Ledger

Ledger Under Inventory Values Is FBT Default FBT Category
are affected applicable?
Depreciation Indirect No Yes Repair, Running and Main-
on Motor Car Expenses tenance of Motor Cars

Setup:
In F11: Features (Accounting Features)
Set Use Reversing Journals & Optional Vouchers to Yes

35

Transactions

Go to Gateway of Tally > F11: Company Features > F1: Accounting Features

Figure 2.14 F 1: Accounting Features

Step 1: Create Memorandum Voucher

Go to Gateway of Tally > Accounting Vouchers > Ctrl + F10: Memorandum Voucher
2. Select Depreciation on Motor Car in Particulars column
3. In the FBT Category selection screen accept the default FBT Category
4. Enter Rs. 25,000 in the Debit field
5. Select Motor Car in Particulars column to credit,
6. Press Enter to accept the amount in the Credit column

36

Transactions

The completed Memorandum voucher is displayed as shown.

Figure 2.15 Memorandum Voucher


FBT Computation
Select Repair, Runnig, Maintainence of Motor Cars and press enter to view Ledger of FBT
Category report to view the FBT on Depreciation

37

Transactions

The Ledger of FBT Category report is displayed as shown

Figure 2.16 Computation Report showing Depreciation on Motor Car

2.5 Adjustments in FBT
FBT is calculated at the prescribed rate on the assessable value of fringe benefits and deemed
fringe benefits on a presumptive basis using certain expenses as a measure. In this backdrop, the
employer may erroneously compute tax on or include any non-official business expenditure or
expenses of personal nature or any advance expenses (not actually incurred) or any expense dis-
allowed or outside the ambit of the FBT. At such times, it is necessary to adjust the excess tax
paid or payable.

2.5.1 Reversal of Excess FBT
Any excess advance tax paid in the preceding quarter can be adjusted against the advance tax
for the subsequent quarter(s). In Tally.ERP 9, you can adjust the excess FBT paid for any
preceding quarter using debit notes.

38

Transactions

Example 5:
With reference to the previous example (Refer Example 3), where Rs. 10,000/- was paid against
B.No. 537 dated 20-04-08, towards Cab and Industrial Fuel expenses.
On 20th May, 2008 a revised invoice from M/s. Krishna Petro Industries was received for Rs.
9,500/- and it was reported that Rs. 500/- out of Rs. 4,000/- (Cab Fuel) had been wrongly included
in the bill.
The same is accounted as shown.
Setup:
In F11: Features (Accounting Features)
Set Use Debit/Creidt Notes to Yes
Go to Gateway of Tally > F11: Company Features > F1: Accounting Features

Figure 2.17 F1: Accounting Features Screen

Step 1: Create Debit Note
Go to Gateway of Tally > Accounting Vouchers > Ctrl + F9: Debit Note
2. Select Krishna Petro Industries in Debit field
3. Enter Rs. 500 in the Debit field
4. In the Billwise Details screen:
Select Agst Ref in the Type of Ref field

39

Transactions

Select 537 in the Name field
Press Enter to accept the Amount
5. Select Fuel Charges in Credit field
6. Select the FBT Category as Repair, Running and Maintenance of Motor Cars and
press Enter

Figure 2.18 Debit Note - FBT Category Selection

7. Press Enter to accept the amount in the Credit column

40

Transactions

The completed Debit Note voucher is displayed as shown

Figure 2.19 Completed Debit Note Voucher


2.5.2 Accounting for Recoveries from Employees
As per section 115WC(1)(a), where the employer recovers from its employees, any amount of
expenditure incurred for the purposes listed in clauses (A) to (P) of sub -section (2) of section
115WB, the value of the fringe benefits shall be determined with reference to the net expenditure
and not gross expenditure. In other words, where there are recoveries from employees towards
fringe benefits or deemed fringe benefits, such items are liable to FBT on the amount of expendi-
ture net of recoveries. However, where the recovery is from third party, the gross amount of
expenditure is subject to FBT.

For example, if an employer incurs a total expenditure of Rs. 15,000 on repair, running and main-
tenance of motor cars, and recovers Rs. 2,000/- from its employees, the value of the fringe
benefits in respect of repair, running and maintenance of motor-cars shall be calculated on the
basis of the net expenditure of Rs. 13,000 (i.e, Rs. 15,000 minus Rs. 2,000).

Tally.ERP 9 allows you to account for recoveries from employees and automatically adjusts the
value of Fringe Benefits subject to FBT in accordance with the statutes.

41

Transactions

Example 6:
On 22nd May 2008, Coramandel Industries recovered Rs. 1,250/- from its employees towards
Entertainment Expenses. The FBT on the recovered amount was reversed accordingly.
Create necessary FBT Recovery voucher class to execute the above transaction.

Step 1: Create Voucher Class
Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > select Journal Voucher
Type and press Enter
1. Navigate to the field Name of Class
2. Type FBT Recovery as Voucher Class and press Enter
3. The Voucher Type Class Allocation screen is displayed
4. In the Default Voucher Type Class Allocation screen,
Set Use Class for FBT Recovery to Yes

The FBT Recovery voucher class screen is displayed as shown.

Figure 2.20 FBT Recovery Class

5. Press Enter to return to Voucher Type Alteration screen

42

Transactions

The completed Voucher Type screen is displayed as shown.

Figure 2.21 Journal Voucher Type Screen

6. Press Enter to save the voucher type

Step 2: Create Journal Voucher
Setup:
In F12: Configure (Journal Configuration)
Set Allow Cash Accounts in Journals to Yes

Figure 2.22 Journal Configuration

43

Transactions

Go to Gateway of Tally > Accounting Vouchers > Press F7 and select FBT Recovery as
Voucher Class

Figure 2.23 Journal Voucher - FBT Voucher Class Selection

2. Select HDFC Bank in the Debit field (If the same is adjusted in the monthly salary,
otherwise select the respective Employee ledger, if any)
3. Enter Rs. 1250 in the Debit Amount field
4. Select Entertainment Expenses in the Credit field
5. In FBT Category screen select Entertainment as the applicable FBT Category

44

Transactions

The FBT Category screen is displayed as shown.

Figure 2.24 Journal Voucher - FBT Category Selection

6. Press Enter to accept the amount in the Credit Amount field

45

Transactions

The completed Journal Voucher is displayed as shown.

Figure 2.25 FBT Recovery Voucher


46

Transactions

2.5.3 Accounting for Exemption on Expenses

Example 7:
On May 29, 2008 M/s. Coramandel Industries paid a sum of Rs. 2,30,000/- as the employer’s con-
tribution towards an approved superannuation fund.

The same is accounted as shown:
Create Employers Contribution to Superannuation Fund ledger

Ledger Under Inventory Is FBT Default FBT Allow
Values are applicable? Category Exemption
affected Amount in
Vouchers
Employer Indirect No Yes Group Term Yes
Contribution Expenses Superannua-
to Superan- tion Fund /
nuation Fund Insurance
Go to Gateway of Tally > Accounts Info. > Ledger > Create

In the Ledger Creation Screen,
Type Employers Contribution to Superannuation Fund as the Ledger Name
Group it under Indirect Expenses group
In Rounding Method field select Not Applicable
Set Is FBT Applicable to Yes
In FBT Category screen
Select Group Term Superannuation Fund as FBT Category from the List of FBT
Categories
Set Allow Exemption Amounts in Vouchers to Yes

47

Transactions

Figure 2.26 FBT Category Details

Figure 2.27 Completed Ledger Creation

Press Enter to accept

48

Transactions

Step 2 : Create Payment Voucher

Go to Gateway of Tally > Accounting Vouchers > F5:Payment Voucher

3. Select Employer Contribution to Superannuation Fund in the Particulars column
4. In the FBT Category screen accept the default FBT Allocation details
6. The FBT Amount Exempt screen appears,
Enter 100000 as the exempted amount

Figure 2.28 FBT Exempt Amount

7. Enter the Cheque No. and details of the transaction in the Narration field

49

Transactions

The completed Payment Voucher is displayed as shown.

Figure 2.29 Payment Voucher

8. Press Enter to accept.

50

Transactions

2.6 Payment of FBT
Fringe Benefits Tax (FBT) is to be paid in advance during any financial year in respect of the
current fringe benefits, which would be chargeable to tax in the assessment year following that
financial year. The employer is required to pay advance tax at the rate of 30% of the current fringe
benefits paid or payable in each quarter.

The advance tax is to be paid on or before 15th of the succeeding month following the quarter in
which the fringe benefits are paid or payable. But, in the case of the last quarter ending on 31st of
March of the financial year, the advance tax shall be payable on or before 15th March of the same
financial year. The advance tax for the first three quarters is to be paid on the basis of actual
expenditure incurred in each quarter. However, in the last quarter the advance tax may be paid on
an estimate basis since the tax has to be paid before the closure of the financial year.

Any excess advance tax paid for the preceding quarter can be adjusted against the advance tax
for the subsequent quarter(s). With effect from July 2005, challan No. ITNS 283 should be used
for payment of Fringe Benefit Tax (FBT) and the tax amount should be rounded off to the nearest
rupee.
Due Dates for payment of FBT
Every assessee who is liable to pay advance tax has to pay tax on the current fringe benefits cal-
culated in the manner laid down.
Advance tax on the current fringe benefits shall be payable by
1. All the companies, who are liable to pay Advance Tax in four installments during each financial
year and the due date of each installment and the amount of such installment shall be as spec-
ified in below :

Due Date of Installment Amount Payable
On or before the 15th June Not less than fifteen per cent of such advance tax.
On or before the 15th September Not less than forty-five per cent of such advance tax as
reduced by the amount, if any, paid in the earlier install-
ment.
On or before the 15th December Not less than seventy-five per cent of such advance tax
as reduced by the amount or amounts, if any, paid in the
earlier installment or installments.
On or before the 15th March The whole amount of such advance tax as reduced by
the amount or amounts, if any, paid in the earlier install-
ment or installments

2. All the assessees (other than companies), who are liable to pay the same in three installments
during each financial year and the due date of each installment and the amount of such install-
ment shall be as specified in below :

51

Transactions

Due Date of Installment Amount Payable
On or before the 15th September Not less than thirty per cent of such advance tax.
On or before the 15th December Not less than sixty per cent of such advance tax as
reduced by the amount, if any, paid in the earlier install-
ment.
On or before the 15th March The whole amount of such advance tax as reduced by
the amount or amounts, if any, paid in the earlier install-
ment or installments.

In Tally.ERP 9, you can make FBT payments using FBT helper facility and generate FBT Challan
ITNS 283 with the appropriate type of payment i.e, Advance Tax, Self Assessment Tax or Tax on
Regular Assessment.

2.6.1 Advance FBT Payment
When an advance payment is made towards FBT, the same is reflected in the FBT computation
report so that you make the balance payment.

Example 8:
On 2nd June 2008, M/s Coromandel Industries paid an advance of Rs.500/- vide Ch. No. 015621.

Create Payment Entry
Set up:
In F12: Configure (Payment Configuration)
Ensure Use Single Entry Mode for Pymt/Rcpt/Contra to Yes


1. Press F2 and change the date to 02-06-2008
3. Select FBT Payable Ledger in the Particulars column
4. Type 500 in the Amount field
5. Set FBT Details as Yes

52

Transactions

Figure 2.30 Enabling FBT Details

The FBT Payment Details screen is displayed as shown

Figure 2.31 FBT Payment Details Screen

6. In Type of Payment field select Advance Tax (100) from Type of Payment
7. In From and To Date fields enter 01-04-2008 and 02-06-2008 respectively

53

Transactions

8. Enter the Challan Details (i.e., the Bank Challan No., Challan Date, Cheque/DD No.,
Bank Name and BSR Code) as shown.

Figure 2.32 FBT Payment Details

9. Type the cheque details in the Narration field

54

Transactions


Figure 2.33 Completed Advance Payment Voucher


FBT Computation Report
Press F2: Period and change the period to 1-4-2008 to 30-6-2008
In F12: Configure
Set Show Expenses Details to Yes, to display the expense details
Set Tax Details to Yes, to display the tax details
Set Show FBT Payment Details to Yes, to display payment details

Figure 2.34 F12: Configure

55

Transactions

The FBT Computation report is displayed along with the payment details, and the net payable
amount is ascertained, as shown.

Figure 2.35 FBT Computation Report showing Advance Payment details

2.6.2 Quarterly FBT Payment

Example 9:
On 15th June, 2008 M/s. Coramandel Industries paid Rs. 41,872/- towards FBT for the quarter
ended 30th June, 2008 vide Ch. No. 015622.

Step 1: Create Payment Entry

Go to Gateway of Tally > Accounting Vouchers > Press F5: Payment Voucher

2. Press Alt+F for FBT Helper

56

Transactions

The Alt + F: FBT Helper button will be dispalyed only when the Payment
voucher is in Single Entry Mode.

In the FBT Payment details screen,

Figure 2.36 FBT Helper

3. Select Advance Tax (100) in the Type of Payment field. The Type of Payment
selected in this field will be marked (checked) in the challan. If tax is paid on self
assessment or regular assessment at the end of the year, the appropriate option is
required to be selected
4. In FBT Ledger field select FBT Payable from the List of FBT Ledgers.
5. In the From date field enter the date as 1-4-2008
6. In the To date field enter the date as 30-6-2008

57

Transactions

7. Enter the Challan Details, i.e., the Bank Challan No., Challan Date, Cheque/DD No.,
Bank Name and BSR Code, as shown.

Figure 2.37 FBT Filters

8. Press Enter to accept
9. The FBT Payable amount is automatically prefilled as 41,827 in the Amount field
11. Enter the cheque details in the Narration field.

58

Transactions


Figure 2.38 FBT Payment Voucher


Tally.ERP 9 allows you to pass the FBT payment entry in the double entry
mode also.

Step 2: Generate FBT Challan
13. Press Page Up to go back to payment voucher entry
14. Press Alt + P to print ITNS 283 Challan
15. In the Voucher Printing screen
Ensure Print as FBT Challan field is set to Yes

59

Transactions

The Voucher Printing screen is displayed as shown.

Figure 2.39 FBT Challan Printing Configuration

Ensure Alt + I: With Preview button is selected to view the print preview of the FBT Chal-
lan.
Press Enter from Voucher Printing screen to view the print preview of FBT Challan

60

Transactions

The Print Preview of FBT Challan - ITNS 283 is displayed as shown

Figure 2.40 Print Preview of FBT Challan – ITNS 283

16. In the Print Preview screen, press Alt + P to Print.

61

Transactions

2.6.3 Payment of Interest & Penalties
In the event of failure to pay advance tax for any quarter or any payment made less than the pre-
scribed rate of 30% of the value of fringe benefits, interest @ 1% on the shortfall will be levied for
each or part of the month for which such shortfall continues.

In Tally.ERP 9, interest and penalties can be accounted for in the following manner.

Example 10:
Assume that a payment of Rs. 500/- was delayed on self-assessment and interest of Rs. 10 was
payable on the same.

Create Interest/ Penalty Ledger

Ledger Under Inventory Val- Use for Assessable Is FBT applicable?
ues are affected Value Calculation
Interest Indirect No No No
Expenses

Interest and Penalties are generally charged off to the Profit & Loss A/c
during the same financial year. Hence, the same is created under Indirect
Expenses group.

Create a Payment Entry

Setup:
In F12: Configure (Payment Voucher)
Set Use Single Entry mode for Pymt/Rcpt/Contra to No


2. Select FBT Payable in the Debit field
3. Specify the amount as 500 in the Debit column
4. Select the Interest ledger in the debit field

62

Transactions

In the Payment Type selection screen, select the appropriate Payment Type i.e., Interest

Figure 2.41 Payment Type Selection

Any ledger selected subsequent to the FBT ledger during voucher entry, will
qualify for the Payment Type options subscreen and will appear in the appro-
priate box provided in the challan.

5. Specify the amount as 10 in the Debit column
6. Select HDFC Bank in the Credit field and amount is defaulted automatically.
7. Set Provide Details to Yes to view FBT Payment Details screen

63

Transactions

The FBT Payment details screen is displayed as shown.

Figure 2.42 FBT Payment Details Screen

8. In Type of Payment field select Self-Assessment Tax (300) from the List of Type of
Payment
9. In From and To date fileds enter the date as 1-4-2008 and 31-3-2009 respectively
10. Enter the Challan details, as shown

Figure 2.43 FBT Payment & Challan Details

64

Transactions

11. Enter the cheque number in the Narration field and press Enter

Figure 2.44 Interest Payment Voucher


The FBT Helper facility will not be available in the double entry mode.
However, FBT details and period for which payment is made can be recorded,
by setting FBT Details to Yes from the Voucher entry screen.

65

Lesson 3: Reports

3.1 FBT Reports
Tally.ERP 9 helps the assessee to generate the FBT Computation Report, FBT Challan, Statutory
Returns and other related reports at the end of a month, quarter or year, as prescribed under the
Act.

3.1.1 FBT Computation (Category wise) Report
The FBT Computation Report displays the particulars of FBT categories of the transacted
expenses ledger, total expenditure amount of fringe benefits, amount recovered if any and the net
amount of fringe benefits. It also comments on the eligible percentage and the value of fringe
benefits subject to FBT.

The FBT is computed at the prescribed rates for the given quarter or the required period after
deducting advance tax paid (if any). The Surcharge, Education Cess and Higher Education Cess
amounts are automatically calculated and included in the net tax payable amount.

66

Reports

Press Alt+F2 and change the period to 01-04-2008 to 30-06-2008 (Quarterly)


If required, you can also view the relevant section codes for the FBT Categories as prescribed in
the statutes, by pressing F12: Configure and enabling Show Section Code to Yes.

67

Reports

Tally.ERP 9 also allows you to view advance payments or any payments made in respect of
Fringe benefits for the respective quarter/ period. The details can be viewed by configuring the
report using F12: Configure option.

In F12: Configure
Set Show Section Code to Yes
Set Show Expenses Details to Yes
Set Show Tax Details to Yes
Set Show FBT Payment Details to Yes

Figure 3.2 FBT Configuration Screen

68

Reports

The FBT Computation Report is displayed as shown.

Figure 3.3 FBT Computation Report with Section Codes, Payment Details & Tax Details

In our case study (Coramandel Industries), the net tax payable is computed as Rs. 42,327 (inclu-
sive of Educ. Cess & Higher Educ. Cess) for the quarter ended 30th June 2008.

69

Reports

3.1.2 Ledgers of FBT Category Report
Tally.ERP 9 allows you to drill down to FBT Ledger from the above FBT Computation Report.
Highlight the required FBT Category – Conference and press Enter
Press F12:Configure and set Show Expenses Details and Show Tax Details to Yes

Figure 3.4 FBT Ledger display

The FBT Ledger displays the list of expenditure ledgers under the selected category, Expenditure
Amount, Exempt Amount, Amount Recovered, Nett Expenditure, Value of Fringe Benefit, FBT,
Education Cess, Secondary Education Cess and Total Tax. It reveals the ledgerwise FBT payable
under the selected FBT category.

70

Reports

You can further drill down to the Voucher level from the above report, by pressing Enter on the
required ledger, for any kind of alteration

Figure 3.5 Ledger Vouchers

71

Reports

3.2 FBT Statutory Returns
3.2.1 ITR 8
Go to Gateway of Tally > Display > Statutory Reports > FBT Reports > FBT Returns

Figure 3.6 FBT Return Print Configuration Screen

Press Enter to view print preview of Form ITR 8

72

Reports

The Print Preview of ITR -8 is displayed as shown

Figure 3.7 ITR 8 - Page1

73

Reports

Figure 3.8 ITR 8 - Page 2

74

Reports


75

Reports


76

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