Fringe Benefit Tax [Video]

The Finance bill, 2005 has introduced Chapter XII-H providing for the levy of Income-tax on fringe benefits offered by employers to their employees. The Finance Minister Mr. P. Chidambaram while presenting the budget in the year 2005 had made the statement that ‘I have looked in to the present system of taxing the perquisites and I have found that many perquisites are disguised as fringe benefits and escape tax. Neither the employer nor the employee pays any tax on these benefits, which are certainly of considerable material value.

At present where the benefits are fully attributable to the employee they are taxed in the hands of the employee: the position will continue. He also justifies that this tax has to continue to provide equity in taxation in this year while moving the Finance Bill 2006. The Fringe Benefit Tax is a tax on expenditure incurred by employers on their employees …