FRINGE BENEFIT TAX

chetan thummar

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Introduction to Fringe Benefit Tax..!!!!

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August 13, 2008

Requirement For Fringe Benefit Tax U/S-115WAThe 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 August 13, 2008 3 total income or not.

Definition Of Employer U/S-115W(a)Employer Includes: Company. Firm. Association of persons or a Body of individual. A local authority Every artificial Juridical Person.4

Employer Excludes: Individual & HUF. Fund/Trust/Instituti on eligible for Exemption u/s10(23). Fund/Trust/Instituti ons registered u/s12AA

A Political Party August 13, 2008 registered u/s 29A

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 Nil If FB exceeds 1000000 Artificial.J.Person,Domestic Co.,Firm 10% Non-Domestic Co. Local Authority Add:- Education Cess:5

Rates

10%

2.5% Nil

2% on [Tax+Surcharge]

August 13, 2008

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 August 13, 2008 6 the limit of 100000

Deemed Fringe Benefit..!!! Covered u/s-115WB(2) Entertainment. Provision of Hospitality. Conference. Sales Promotion & Publicity. Employees Welfare. Conveyance. Repairs,Running,Maintena nce of Aircrafts & the amount of Depreciation thereon(including Fuel). Telephones (including Mobiles) Guest House. Festival Celebrations. Health Club.

Use of Hotel,Boarding,Lodging Other Club Facilities. Facilities. Gifts. Repairs,Running,Maintena Scholarships nce of Motor Car & the August 13, 2008 7 amount of Depreciation Tour & Travels (including thereon(including Fuel)

Includes:

Entertainment u/s115WB(2)(A) Rate-20%

Excludes:

Exp in-connection with Exp on festive-occasion. exhibition, performance,amusement,gam e or sports. Reimbursement of expenses. Exp on non-festive occasions. Purchase of ticket for charity Shows,sports event. Exp on Firecracker on Annual day.8 August 13, 2008

Includes: Food & Beverages After office hours. In-house training.

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

Excludes:

To employees with in office or factory. Paid vouchers Training center (permanent)

other than employees with in office. In hotel business-drinks to customer as welcome drink. Training center-(temporary)9

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Includes:

Conference u/s115WB(2)(C) Rate-20%

Excludes:

Conveyance,tour,travel on hotel or boarding & lodging in connection to a conference. Programs organized by Trade bodies or institutions. Complementary exp to participation fee. Conference for agent & dealers.10

Fees for participation by emee in any conference.

August 13, 2008

Includes:

S.P & Publicity u/s115WB(2)(D) Rate-20%

Excludes:

If research done by own self for market or product. Free offers,free samples of products,exp on artwork or royalty. Winning trips by customer or client (travel+lodging+boarding) Distribution of free trade samples.11

Brokerage & selling Com. Exp on salesman(being emee) Rebates,discount & bonus points on credit card. Incentives to distributor. Market or product research from outside agency. Exp on call centers as post sale services. Exp on ad-films.

August 13, 2008

Employees welfare u/s-115WB(2)(E) Rate20% Includes: Excludes: Group personal accidents/ workmen compensation insurance/ group health insurance/ group medical n life insurance (under nonstatutory 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.12 August 13, 2008

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

Includes:

Conveyance u/s115WB(2)(F) Rate-20%

Excludes:

Exp for clients business reimbursed. Leave travel concession Reimbursement of car exp. Rent paid for operating lease.

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

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August 13, 2008

Use of Hotel,Boarding & Lodging Facilitiesu/s115WB(2)(G) Rate-20% Includes: Excludes: Pre-diem allowance. On hotel,boarding,lodging. Fixed hotel allowance.

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August 13, 2008

Repairs,Running,Maintenanc e of Motor Car u/s115WB(2)(H) Rate-20% Excludes: Includes: Repairs. Running(including fuel). Maintenance. Depn on motor cars. Lease rent financial lease Garage rent Drivers salary Int. on loan. Car excludes: Delivery vans Display vans Tempos Trucks Buses Tractor Ambulance But includes Jeep.August 13, 2008

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Repairs,Running,Maintenanc e of Aircraft u/s115WB(2)(I) Rate-20% Excludes: Includes: Repairs. Running(including fuel). Maintenance. Depn on Aircrafts. Lease rent financial lease Garage rent salary Int. on loan.16 August 13, 2008

For emer engaged in carriage of passengers/ goods.

Telephones(including Mobile) u/s-115WB(2)(J) RateIncludes: Excludes: 20% All except exclusions. Exp on leased Telephones.

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August 13, 2008

Includes: Food in G.H Contract charges Rent

Guest house u/s115WB(2)(K) Rate-20%

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, 2008

Includes:

Festival Celebrations u/s-115WB(2)(L) Rate50%

Excludes:

Meeting/get together on festive occasions.

On independence day or republic day.

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August 13, 2008

Includes:

Use of health club & similar facility u/s115WB(2)(M) Rate-50%

Excludes:

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

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August 13, 2008

Includes: Entrance fee

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

Excludes:

Depreciation on club building Fixed club allowance.

Reimbursement of exp

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August 13, 2008

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, 2008

Includes: To emees & others.

Scholarship u/s115WB(2)(P) Rate-50%

Excludes:

Emees sent to educational institutions. Awarded to student or trainee.

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August 13, 2008

Includes:

Tour,Travel (Including Foreign Travel) u/s115WB(2)(Q) Rate-5%

Excludes:

Only traveling fair can be claimed.

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August 13, 2008

Industry Specific Amendments..!!! Employers engaged Hospitality Conveyanc Hotelin the business of: Hotel Construction Manufacture n Production of Pharmaceutical. Manufacture n Production of Computer Software. Carriage of Passengers/goods by Motor Car Carriage of Passengers/goods by Aircraft.25

e

5% 5% 5% 5% 5% 5%

Repairs, Boarding running, & lodging Maintenan ce n Depn

5% 5% 5% 5% 5% NIL

August 13, 2008

Other Propositions..!!!-1Employer 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, 2008

Other Propositions..!!!-2Bogus 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.27 August 13, 2008

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, 2008

Section ListSections 115WA 115WB 115WC 115WD(1) 115WE 115WF 115WG 115WH 115WI 115WJ 115WK 115WL29

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 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, 2008

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, 2008

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, 2008

Thank You!32 August 13, 2008

Chetan thummar