fringe benefit tax

This query is : Resolved

CA Ysil Karunai (Querist)
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19 November 2008 Dear Sir,

1. Fringe benefit tax is a tax on expenditure and not tax on income, then why it is chargeable to tax?
2. what is the actual concept of this taxation?

Zeeshan

Zeeshan (Expert)
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19 November 2008 CONCEPT: SPECIFIED EXPENDITURE ON FBT IS ALLOWED AS EXPENDITURE IN THE HANDS OF THE EMPLOYER AND NOT TAXABLE IN THE HANDS OF EMPLOYEE AS PERQUISITES, HENCE EARLIER THERE WAS NO TAX EFFECT ON THOSE EXPENDITURES THEREFORE THE FBT LEVIED ON SUCH EXPENDITURES. IT IS A BROADER CONCEPT OF FBT.
YES IT IS A TAX ON EXPENDITURE.
YOUR FIRST QUESTION IS NOT CLEAR.

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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19 November 2008 FBT is is an additional income tax paid or payable by the employer for the advantages attached with the employment.
FBT is payable even if the Assessee has no income under any other head.Even if his income is nil he have to pay FBT.

FBT is charable on pursumtive basis.

There are Two type of FBT . Direct FBT and Deemed FBT.

For direct FBT Employer have to pay 33.99% flat on the value of FBT
For Deemed FBT there are specific rate for each catgory. please refer any book for that.

Some cases FBT & Perquisite have direct relation ship
If any expenditure or advantage is provided by the employer to that extent employee gains advantage. Advantages arise in the form of reduced expense . reduced expense infact genarate income. indirectly there arise income. that is one basis

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Ravikumar.G

Ravikumar.G (Expert)
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19 November 2008 Further,
The rationale behind FBT is that it helps restore equity and fairness to those employees who do not receive such benefits, and allows a Federal Government to more fairly assess taxpayer entitlement to government benefits, or liability to government taxes or levies.