The Hindu Business Line : FBT on security service

Our company provides to the employees furnished accommodation in its factory premises on a nominal rent of Rs 40 per month. We hire some agencies for the security of colony.

Will the amount payable to security agency attract fringe benefit tax (FBT)?

K. Praveen Reddy, email

It is possible for the assessing officer (AO) to invoke Section 115WB(2)(E), which specifically ropes in employee welfare expenses for being subjected to FBT.

That the security guards are there to ring-fence the colony makes his case undeniable.

Therefore, if you pay the security agency a lump-sum without distinguishing between colony and factory security, the AO would insist on separation with a view to laying his hands upon the expenses relatable to the colony.

Housing loan pre-paid

I have a housing loan from a bank on my only self-occupied house. Recently, I pre-paid part of the amount in addition to monthly EMIs I am paying. Please confirm whether I will be eligible for deduction under Section 80C for the amount prepaid on housing loan.

Hansraj Rathore, email

The principal portion of the amount prepaid along with the principal components embedded in the EMIs would qualify for deduction under Section 80C subject to the overall limit of Rs 1 lakh for various savings, including contribution to recognised provident fund, public provident fund, etc. In case you overshoot your quota of Rs 1 lakh because of the bunching effect brought about by the premature repayment, you cannot carry this forward to the future years.

Carbon trading

Please explain carbon trading in detail. Is it like a share? Can individual investors buy it in an exchange?

Joseph Lal, email

Let me explain in a layman's language. As per the Kyoto Protocol to which India and many of the European nations are signatories, but understandably not the US which is responsible for 25 per cent of the pollution, the carbon levels have to be progressively reduced by the industrialised nations.

India's carbon emission levels are well within the acceptable levels. The Kyoto Protocol allows two options to industrialised nations whose emission levels are dangerously above the acceptable threshold — either to reduce them or buy carbon credits from companies in countries such as India where the emission levels are below the danger mark.

The first option is in the realm of long-term and the second option, being easy and cheap to comply with, is what they plump for. Indian companies are making a tidy income out of carbon trading. No, they are not meant to be traded like shares.

The players as it is are only the violators and the compliers.

S. Murlidharan

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

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