Monday, July 6, 2009

The flip flop of fringe benefit tax(FBT)

Finally the FBT is ablolished. The concerns of India Inc has been addressed by the FM in his first budget. When it was proposed in 2005 there was no easy takers for this taxation system. The companies feared that this tax was out against their growth.

Fringe benefit tax

The taxation of perquisites -- or fringe benefits -- provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefit tax.

Any benefits -- or perks -- that employees (current or past) get as a result of their employment are to be taxed, but in this case in the hands of the employer.

This includes employee compensation other than the wages, tips, health insurance, life insurance and pension plans.

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