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Total Number of Subscribers: 393 |
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Date: 20 Feb 2008 |
Compiled by : M. Sathya Kumar |
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Up to 01.04.2006, benefits or
amenities collectively enjoyed by employees escaped taxation since it was
difficult to attribute any quantum of benefit to individual employees. The Finance Act 2005 introduced
an additional income tax in respect of such benefits known as the Fringe
Benefit Tax transferring a substantial tax liability from employees to employers while
simultaneously simplifying tax collection. Chapter XII-H containing sections
115W to 115WL were inserted in the Income tax Act. This chapter has been
divided into three parts- Part A containing meaning of certain
expressions used in the chapter, Part B containing the Basis of charge and
Part C prescribing the procedures for filing of return, assessment and
payment of tax. S. 115W defines an ‘employer’ as a a) A company; b) A firm; c) An association of persons or a body of individuals,
whether incorporated or not; d) A local authority; and e) Every artificial juridical person,
not falling within any of the preceding sub-clauses: The following persons are deemed not to be an ‘employer’: ·
Institutions/trusts eligible for exemption
under clause (23C) of S.10 ·
Institutions/ trusts registered under
S.12AA ·
Registered political parties Besides the above, the
following persons are not liable to pay
FBT: ·
Individuals ·
Sole proprietorship concerns ·
HUFs ·
Central Government ·
State Governments ·
An
entity which does not have employees
based in (Since an employer-employee relationship
is pre-requisite for the levy of FBT.) S.115WA is the charging section
which makes FBT applicable in an AY if the following conditions are satisfied ·
FBs are provided or deemed to be provided by an “employer” ·
To
employees ·
During the PY. This tax shall be calculated @
30% on the value of Fringe benefits
(plus Surcharge plus Education cess) FBT has no relationship with
the total income computed under the Income Tax Act. Even if a person has no
income or exempt income under S.10A or S.10B, the person remains liable to
pay FBT. S.115WB (1) lists out four types of
Direct FBs and S.115WB (2)
specifies seventeen types of FBs which are deemed to have been provided by the
employer irrespective of whether the
expenditure is attributed to employees or not .E.g. Sales Promotion Contributed
by: Md.Azarrudin Source: www.accountant.com |
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