FBT - Some Relief for India Inc

Highlights of the provisions relating to Fringe Benefit Tax (FBT), as finally passed in Lok Sabha

FBT that was introduced in the Union Budget 2005-06 has been retained but the provisions have been watered down. The base levels i.e. the percentage of Fringe Benefit that would be taxed have been lowered.

The following items shall become taxable @ 30% under chapter XII-H in the hands of the employer:

	Type of Expenditure	Base Value for FBT
1.	Any Privilege, service, facility or amenity provided by the employer to the employee whether by way of reimbursement or otherwise which has not been offered as taxable in the hands of the employee	100%
2.	Any free or concessional ticket provided by the employer to the employee for personal travel	100%
3.	Any contribution by the employer to the Superannuation fund	100%
4.	Entertainment Expenses	20%
5.	Provision of hospitality to any person	20%
6.	Any expenses on conference except fees for the conference	20%
7.	Staff Welfare expenses	20%
8.	Conveyance and Travelling (Incl. Foreign Travel)	20%
9.	Boarding and Lodging when on travel or otherwise	20%
10.	Repairs, maintenance and running (incl. fuel) of Cars and the amount of Depreciation thereon	20%
11.	Telephone expenses	20%
12.	Maintenance of any accommodation in the nature of guest house	20%
13.	Festival celebrations	50%
14.	Expenses on Health club and similar facilities	50%
15.	Expenses on any other club facility	50%
16.	Expenses on Gifts	50%
17.	Expenses on any scholarships	50%

 
The FBT will not be applicable in case of charitable institutions that are exempt from payment of income tax.

The proposals with regard to Cash Withdrawal Tax have also been relaxed. There will be no cash withdrawal tax on savings bank accounts. Over Rs. 25,000 withdrawn by individuals or HUF in a day from current account will be subjected to 0.1 % tax; for others it will be on Rs. 1 lakh withdrawn during a day. Tax will be levied on withdrawals from all banks instead of only scheduled banks proposed earlier.

Further, Income tax exemption limit for women have been raised to Rs. 1.35 lakh and for senior citizens to Rs. 1.85 lakh.