what is fring benefit tax?

Answer 1

A fringe benefit is a form of compensation an employer gives an employee. For example, a luxury car where a basic car will do. The difference in the perceived value would be taxable. Or if the employer gives the staff free lunches every day. then that too becomes a taxable benefit and must be reported as income at tax time.

Answer 2

Any Fringe benefit shared/granted by employer to/with employees is subject to FBT.refer to provisions of FBT under Income Tax Act in www.allindiantaxes.com

Answer 3

It is Fringe Benefit Tax, shortly known as FBT, which is levied on companies, firms etc. on the amount spent for their employees but not included as part of their salary. For example, many companies pay conveyance allowance to their staff but show it as reimburesment so that the employee enjoy a tax free benefit. To trap such items, the Govt. has introduced FBT. The company has to pay on such expenses a certain % as tax.

Answer 4

Fringe Benefit Tax (FBT) is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees, in addition to the cash salary or wages paid. Fringe Benefit Tax was introduced in India in the year 2005-2006.

The rationale for levying a fringe benefit tax on the employer lies in the inherent difficulty in isolating the 'personal element' where there is collective enjoyment of such benefits and attributing the same directly to the employee.

Moreover, in cases where the employer directly reimburses the employee for expenses incurred, it becomes difficult to effectively capture the true extent of the perquisite provided because of the problem of cash flow in the hands of the employer.

Therefore, a two-pronged approach has been adopted for the taxation of fringe benefits under the Income-tax Act.

Perquisites which can be directly attributed to the employees are taxed in their hands in accordance with the existing provisions of section 17(2) of the Income-tax Act and subject to the method of valuation outlined in rule 3 of the Income-tax Rules. In cases, where attribution of the personal benefit poses problems, or for some reasons, it is not feasible to tax the benefits in the hands of the employee, it is proposed to levy a separate tax known as the fringe benefit tax on the employer on the value of such benefits provided or deemed to have been provided to the employees.

Fringe benefits shall be deemed to have been provided if the employer has incurred any expense or made any payment for the purposes of:

(a) entertainment;
(b) festival celebrations;
(c) gifts;
(d) use of club facilities;
(e) provision of hospitality of every kind to any person whether by way of food and beverage or in any other manner, excluding food or beverages provided to the employees in the office or factory;
(f) maintenance of guest house;
(g) conference;
(h) employee welfare;
(i) use of health club, sports and similar facilities;
(j) sales promotion, including publicity;
(k) conveyance, tour and travel, including foreign travel expenses;
(l) hotel boarding and lodging;
(m) repair, running and maintenance of motor cars;
(n) repair, running and maintenance of aircraft;
(o) consumption of fuel other than industrial fuel;
(p) use of telephone;
(q) scholarship to the children of the employees.


http://inhome.rediff.com/money/2005/aug/31tax.htm

Answer 5

this is the tax on the benifits you give to your emplyees in form of money beside the salary