Budget 2009-10. Fringe Benefit Tax Abolished.
India Fringe Benefit Tax
Fringe Benefit Tax (FBT)
Employees get many benefits at the cost of the employers. If a benefit is fully attributable to an employee, it is taxed in the hands of the employee. Where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees, they shall be taxed in the hands of the employer, and this tax is called Fringe Benefit Tax. An employer is liable for fringe benefit tax even if they do not have any income which is chargeable to the income tax.
The FBT is imposed on the following entities:
3 Association of person and body of individuals
4 Local authority
5 Artificial juridical persons
Exempted Entities. The following are not considered employers for the purpose of fringe benefit tax:
* An individual,
* A Hindu undivided family,
* Entity eligible for exemption under section 10(23C) or registered under 12AA,
* Central Government or State Government, and
* A political party.
Value of Fringe Benefits
1. For the expenses under entertainment, employee welfare, conference, conveyance, company car, sales promotion, hospitality, hotel & lodging, telephone and maintenance of accommodation, 20% of the total amount is taxable.
2. For the expenses under festival celebrations, use of health club and other clubs, gifts and scholarship, 50% of the total amount is taxable.
3. For the tour, travel and foreign travel expenses, 5% of the total amount is taxable (value as per section 115WC).
4. Any free or concessional ticket provided by the employer for private journeys of his employees or their family members--100% of the cost minus any recovery from the employee.
5. Any contribution by the employer to an approved superannuation fund for employees--100% of the amount in excess of Rs. 1,00,000 for each employee.
6. Any specified security or sweat equity shares allotted/transferred to his employee free of cost or at concessional rate--100% of fair market value (FMV) of the specified security or sweat equity shares on the date on which options vest with the employee minus the amount actually paid by the employee.
Fringe Benefit Tax Rate & Return
The value of the fringe benefits is taxable at 30% tax rate and additional 3% education cess on the total tax amount. For corporates with turnover of over 1 crore, there is additional 10% surcharge on the 30% tax.
For depositing Fringe Benefit Tax (0026) or Banking Cash Transcation Tax (0036) use Challan no ITNS 283. The annual return is filed on the form ITR 8.
The due date for the return of fringe benefit tax for a companay or business or profession (non-corporate) where the books of accounts are required to be audited is September 30. For all others, the due date is July 31.
Advance Payment of Fringe Benefit Tax
The total Fringe Benefit Tax for the year is payable in advance in installments, as under:
On or before June 15 -- 15% of FBT for the year
On or before September 15 -- 45% of FBT for the year for corporate assessee or 30% for non-corporate assessee
On or before December 15 -- 75% of FBT for the year for corporate assessee or 60% for non-corporate assessee
On or before March 15 -- 100% of FBT for the year for corporate or non-corporate assessee
(Note: Advance FBT is to be paid even if the tax is less than Rs. 5,000)
This site has advertisment links just as at the bottom of this topic. You will find these links useful.