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FRINGE BENEFIT TAX

 
    FBT is payable     Fringe Benefits    |   Separate procedures
 

Fringe Benefit Tax is a surrogate tax on collective benefits derived by employees disguised as expenses of the employer. The tax operates on a presumptive basis. Fringe benefits mean any privilege, service, facility or amenity directly or indirectly provided by an employer to his employees (including former employees) by reason of their employment

FBT is payable by the following persons:
  • A company,
  • A firm,
  • An association of person or Body of individuals,
  • A local authority or an artificial juridical person.
  • Entities claiming exemption under section 10 such as (Mutual Funds, EOU’s, FTZs’.)
Following entities are excluded from payment of FBT:
  • An Individual and HUF
  • Trust and Institutions claiming exemption under section 10(23C) or having a valid registration under section 12AA.
  • Political parties.
  • A local authority or an artificial juridical person.
  • Central & State Government.
 
 
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Fringe Benefit Tax is levied at 30% of the value of fringe benefits provided or deemed to be provided. The valuation of fringe benefit tax is to be made as under:  

Fringe Benefits Normal Rate   Concession Applicable to
Superannuation Fund Contribution. Amt. Above Rs. 1 lakh per employee  
Entertainment 20% -- --
Hospitality 20% 5% Hotels, Airlines & Shipping
Conference 20% -- --
Sales promotion & publicity 20% -- --
Employees welfare 20% -- --
Conveyance 20% 5%

Construction, Pharmaceutical & computer software

Hotel facilities   20% 5% Pharmaceutical & computer software, airlines and shipping.  
Motor car expenditure (incl. depreciation) 20% 5% Tourist Vehicles / Taxis
Aircraft expenses 20% Nil Airlines
Telephone expenses 20% -- --
Guest House expenses 20% -- --
Tour & travel (incl. Foreign travel) 5% -- --
Festival expense Health Club expense Club expense Gif Scholarships 20% -- --
 
 
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  Separate procedures have been prescribed for the following:
  • Payment of fringe benefit tax in advance (on a quarterly basis) & payment of interest on delayed payment
  • Filing of Returns (on an annual basis)
  • Assessment & Issue of Demand Notice/Refund
  • Reassessment of Fringe Benefits & Levy of Penalties
 
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