FRINGE benefit TAX

Presented to: Ms. Padma Faculty (Corporate Tax)

Presented by: Milan Singh Negi Roll No: 13 LL.M 3rd Sem.

Date:

Introduction to Fringe Benefit Tax..!!!!

August 13, 2012

Requirement For Fringe Benefit Tax U/S-115WA

The FBT is payable by an Employer. The Employer is liable only if he has an Employee. Employer is liable only if he has provided Fringe Benefit and/or is deemed to have provided Fringe Benefit to his employees. FBT is payable at the Rate of 30% (plus applicable Surcharge plus Education Cess) of the Value of Fringe Benefit Provided. FBT is payable irrespective of whether Employer is liable to pay Income-Tax on his total income or not.

August 13, 2012

Definition Of Employer U/S-115W(a)

Employer Includes: Employer Excludes:

Company.
Firm. Association of persons or a Body of individual. A local authority Every artificial Juridical Person.

Individual & HUF.

Fund/Trust/Institution eligible for Exemption u/s10(23). Fund/Trust/Institutions registered u/s-12AA A Political Party registered u/s 29A

August 13, 2012

Computation of Fringe Benefit Tax Liability & Rates.

30% on the Value of Fringe Benefit- u/s-115WC

Add:- Surcharge:
For AOP/BOI: If FB does not exceeds 1000000 If FB exceeds 1000000 Artificial.J.Person,Domestic Co.,Firm Non-Domestic Co. Local Authority

Rates
Nil 10% 10% 2.5% Nil

Add:- Education Cess:

2% on [Tax+Surcharge]
5 August 13, 2012

Fringe Benefit Expenses..!!!

Covered u/s-115WB(1)

Any Privilege, Service, Facility or Amenity Whether provided Directly or Indirectly, or whether by way of reimbursement to Employee..
Any Free or Concessional Ticket provided by the employer for private Journeys of the employees or his family. Expenses spent towards contribution in Superannuation Fund.. Which is exempted upto the limit of 100000

August 13, 2012

Deemed Fringe Benefit..!!! Covered u/s-115WB(2)

Entertainment. Repairs,Running,Maintenance of Aircrafts & the amount of Depreciation thereon(including Fuel). Telephones (including Mobiles) Guest House.

Provision of Hospitality.
Conference. Sales Promotion & Publicity. Employees Welfare. Conveyance. Use of Hotel,Boarding,Lodging Facilities.

Festival Celebrations.
Health Club. Other Club Facilities.

Gifts. Repairs,Running,Maintenance of Motor Car & the amount of Scholarships Depreciation thereon(including Fuel) Tour & Travels (including Foreign travels) August 13, 2012 7

Entertainment u/s-115WB(2)(A) Rate-20%

Includes:

Excludes:

Exp in-connection with exhibition, performance,amusement,game or sports.

Reimbursement of expenses.

Exp on festive-occasion.

Exp on non-festive occasions.

Purchase of ticket for charity Shows,sports event. Exp on Firecracker on Annual day.

August 13, 2012

Provision for Hospitality u/s115WB(2)(B) Rate-20%

Includes:

Excludes:

Food & Beverages

After office hours. In-house training.

To employees with in office or factory.

Paid vouchers

other than employees with in office.

In hotel business-drinks to customer as welcome drink. Training center-(temporary)

Training center (permanent)

August 13, 2012

Conference u/s-115WB(2)(C) Rate-20%

Includes:

Excludes:

Conveyance,tour,travel on hotel or Fees for participation by emee boarding & lodging in connection to a in any conference. conference.
Programs organized by Trade bodies or institutions. Complementary exp to participation fee. Conference for agent & dealers.

10

August 13, 2012

S.P & Publicity u/s-115WB(2)(D) Rate-20%

Includes: Excludes:

If research done by own self for market or product.

Free offers,free samples of products,exp on artwork or royalty.

Brokerage & selling Com.

Exp on salesman(being emee) Rebates,discount & bonus points on credit card.

Winning trips by customer or client (travel+lodging+boarding)

Distribution of free trade samples.

Incentives to distributor.
Market or product research from outside agency. Exp on call centers as post sale services. Exp on ad-films.

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August 13, 2012

Employees welfare u/s115WB(2)(E) Rate-20%

Includes:
Group personal accidents/ workmen compensation insurance/ group health insurance/ group medical n life insurance (under non-statutory obligation).
Reimbursement by emer on medical treatment not exceeding 15000. Injuries Subsidy Various exp in emees colony. Book & periodical to emee Prize, rewards, awards. Transport facility.

Excludes:
Payment against Statutory obligation. Gratuity fund Medical exp above 15000 Treatment of injuries-statutory obligation Construction site.

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August 13, 2012

Conveyance u/s-115WB(2)(F) Rate-20%

Includes:
Exp for clients business reimbursed.
Leave travel concession Reimbursement of car exp.

Excludes:
Allowance for journey from home to work place.
Allowance Professional travels. (reimbursement)

Rent paid for operating lease.

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August 13, 2012

Use of Hotel,Boarding & Lodging Facilitiesu/s-115WB(2)(G) Rate-20%

Includes:
Pre-diem allowance.
On hotel,boarding,lodging.

Excludes:
Fixed hotel allowance.

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August 13, 2012

Repairs,Running,Maintenance of Motor Car u/s-115WB(2)(H) Rate-20%

Includes:
Repairs. Running(including fuel). Maintenance. Depn on motor cars.

Excludes:
Car excludes: Delivery vans

Display vans
Tempos Trucks

Lease rent financial lease

Garage rent Drivers salary Int. on loan.

Buses
Tractor Ambulance But includes Jeep.
August 13, 2012

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Repairs,Running,Maintenance of Aircraft u/s-115WB(2)(I) Rate-20%

Includes:
Repairs. Running(including fuel). Maintenance. Depn on Aircrafts. Lease rent financial lease Garage rent salary Int. on loan.
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Excludes:

For emer engaged in carriage of passengers/ goods.

Telephones(including Mobile) u/s-115WB(2)(J) Rate-20%

Includes:
All except exclusions.

Excludes:
Exp on leased Telephones.

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August 13, 2012

Guest house u/s-115WB(2)(K) Rate-20%

Includes:
Food in G.H
Contract charges Rent

Excludes:
Exp on refrigerator, t.v, furniture, etc
Depreciation on G.H Maintenance exp for training purpose.

Maintenance charges
Rent or Hire charges to hotel if stay exceeding 182 days.

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August 13, 2012

Festival Celebrations u/s-115WB(2)(L) Rate-50%

Includes:
Meeting/get together on festive occasions.

Excludes:
On independence day or republic day.

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August 13, 2012

Use of health club & similar facility u/s-115WB(2)(M) Rate-50%

Includes:
Hotel resort providing health & fitness facility.
Subscription for membership in club Fitness centers, health saloon, gymnasium, massage centers, slimming center, aerobics.

Excludes:

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August 13, 2012

Use of any other Club facility u/s115WB(2)(N) Rate-50%

Includes:
Entrance fee
Reimbursement of exp

Excludes:
Depreciation on club building
Fixed club allowance.

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August 13, 2012

Gifts u/s-115WB(2)(O) Rate-50%

Includes:
In cash
In kind Trade promotion scheme (with different product) Customers Marriage or others Any other person.

Excludes:

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August 13, 2012

Scholarship u/s-115WB(2)(P) Rate-50%

Includes:
To emees & others.
Emees sent to educational institutions. Awarded to student or trainee.

Excludes:

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August 13, 2012

Tour,Travel (Including Foreign Travel) u/s-115WB(2)(Q) Rate-5%

Includes:
Only traveling fair can be claimed.

Excludes:

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August 13, 2012

Industry Specific Amendments..!!!

Employers engaged in the business of:
Hotel Construction

Hospitality

Conveyance

5% 5%

Hotel Repairs, Boarding & running, lodging Maintenance n Depn

Manufacture n Production of Pharmaceutical. Manufacture n Production of Computer Software. Carriage of Passengers/goods by Motor Car Carriage of Passengers/goods by Aircraft.
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5%
5% 5% 5%

5%
5% 5% 5% 5% NIL

August 13, 2012

Other Propositions..!!!-1
Employer is a must. No segregation of expenses incurred on emees or others.

Capital or Revenue Expenditure.

Preoperative Expense. Expenditure to be Calculated on Due Dates Net expenses to be considered in case of recovery from employees. Cost Sharing agreement with group companies. Disallowance u/s-37,40,40A & 43B.
26 August 13, 2012

Other Propositions..!!!-2
Bogus Expenditure.

FBT in case of depreciation.

Reimbursement of expenditure by Client. Accounting Records.

FBT not Deductible as per sec 40(a)(ic).

FBT deductible for computing Book Profits-[115JB] Credit of FBT Paid by a foreign co. in the country of residence.

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August 13, 2012

Advance Tax due date..!!!

Quarter Apr-Jun July-Spet Oct-Dec Jan-Mar Due Dates On or before 15th July On or before 15th Oct On or before 15th Jan On or before 15th Mar(Before the quarter ends)

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August 13, 2012

Section List
Sections 115WA 115WB
115WC 115WD(1) 115WE 115WF 115WG 115WH

List
Requirements of FBT

Fringe Benefit Expenses

Value of Fringe Benefits Return of FB Assessment Best Judgment Assessment FB Escaping Assessment Issue of notice where FB have Escaped Assessment

115WI
115WJ 115WK 115WL
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Payment of FBT
Advance Tax in respect of FB Interest for default in furnishing return of FB Application of Other provisions of this act.
August 13, 2012

Updations!!!
Companies SBI IOC RIL ICICI HLL SAIL BHARTI TCS ITC TISCO

Top 10 FBT Payers of India FBT(fig in cr) As % of employee expense. 88.5 1.1 38.9 1.5 37 3.1 36.9 2.3 35 5.4 26.5 0.5 25.5 2.2 17.8 0.3 16.1 2.5 16 1.1

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August 13, 2012

Case Laws!!!
Infosys dating exp reimbursed by emer
kingfisher airways & Air deccan:
Indirect benefits provided.

"Awake, Arise and Stop not , till the goal is achieved."

31 August 13, 2012

Thank You!
32 August 13, 2012

Milan Singh Negi