Fringe Benefit Tax
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TAXATION
Fringe Benefit Tax— Concept & Compliance
-Ved Jain
he Hon’ble Finance Minister in the Finance Bill 2005 had proposed to levy tax in the hands of the employer in respect of the benefits being extended to the employees by such employer. The objective, as stated by the Finance Minister, is the difficulty in isolating the personal elements in respect of the benefits provided to the employees where there is a collective enjoyment of such benefits for purposes of business but includes partially the benefit of personal nature. After the introduction of the Bill many issues were raised by the trade, industry and chambers. After extensive consultations and deliberations the initial proposal put forward in the Finance Bill 2005 was modified. The salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005 are as under:
T
With the notification of the Finance Act, 2005, the Fringe Benefit Tax has become a law and every person falling within the definition of employer shall now be required to comply with the provisions relating to the Fringe Benefit Tax. This article provides an overview of the salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005.
to pay income tax by an employer. Accordingly, all those who fall within the definition of employer shall be required to pay tax on the fringe benefits provided to the employees irrespective of the fact that income, which an employer is earning, is exempt under the Income Tax Act or there is a loss. Accordingly, those entities which are claiming exemption under Section 10 such as mutual funds, undertakings in free trade zone claiming exemption under Section 10A, export-oriented units claiming exemption under Section 10B or under Section 10BA, shall be liable to pay the Fringe Benefit Tax. The Fringe Benefit Tax is a liability of the tax of the employees to be born by the employer. That is why even loss making entities and...
Fringe Benefit Tax— Concept & Compliance
-Ved Jain
he Hon’ble Finance Minister in the Finance Bill 2005 had proposed to levy tax in the hands of the employer in respect of the benefits being extended to the employees by such employer. The objective, as stated by the Finance Minister, is the difficulty in isolating the personal elements in respect of the benefits provided to the employees where there is a collective enjoyment of such benefits for purposes of business but includes partially the benefit of personal nature. After the introduction of the Bill many issues were raised by the trade, industry and chambers. After extensive consultations and deliberations the initial proposal put forward in the Finance Bill 2005 was modified. The salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005 are as under:
T
With the notification of the Finance Act, 2005, the Fringe Benefit Tax has become a law and every person falling within the definition of employer shall now be required to comply with the provisions relating to the Fringe Benefit Tax. This article provides an overview of the salient features of the Fringe Benefit Tax after amendment and notification of the Finance Act, 2005.
to pay income tax by an employer. Accordingly, all those who fall within the definition of employer shall be required to pay tax on the fringe benefits provided to the employees irrespective of the fact that income, which an employer is earning, is exempt under the Income Tax Act or there is a loss. Accordingly, those entities which are claiming exemption under Section 10 such as mutual funds, undertakings in free trade zone claiming exemption under Section 10A, export-oriented units claiming exemption under Section 10B or under Section 10BA, shall be liable to pay the Fringe Benefit Tax. The Fringe Benefit Tax is a liability of the tax of the employees to be born by the employer. That is why even loss making entities and...