The penalty provisions of section 271FB of the Income Tax Act applies to all the employer (who paid fringe benefits to its employees) who fails to furnish the ‘return of fringe benefits’ as required under section 115WD (1) of the Income Tax Act. The said penalty provisions of section 271FB are taken up and explained in the current article.
Please note- The fringe benefits tax (FBT) was the tax applied to most, although not all, fringe benefits in India. A new tax was imposed on employers by India’s Finance Act 2005 from the financial year commencing April 1, 2005. The fringe benefit tax was abolished in the 2009 Union budget of India by the then Finance Minister Pranab Mukherjee
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Understanding provisions of section 271FB of the Income Tax Act
The penalty provisions of section 271FB levies penalty under the following circumstances –
- An employer, who has either paid or has made provision for payment of fringe benefits to its employee during the previous year, is required to file a ‘return of fringe benefits’ as per provisions of section 115WD (1) of the Income Tax Act.
- In case the employer fails to furnish the required ‘return of fringe benefits’ within the prescribed time limit. Then, the Assessing Officer may direct such defaulter to pay the penalty under section 271FB.
Understanding provisions attached with ‘return of fringe benefits’
Fringe benefit simply means the benefits in addition to an employee’s wages. Provisions of section 115WD (1) mandate every employer, who has either paid or made provisions for payment of fringe benefits to its employees, to furnish the return of fringe benefits within the following prescribed due date –
| Type of employer | Due date |
| A company or
A person (other than a company) whose accounts are required to be audited under the Income Tax Act or under any other law. |
30th September |
| Any other employer. | 31st July |
No penalty in case of the reasonable cause –
Provisions of section 273B of the Income Tax Act states that no penalty would be levied under section 271FB even in case the employer fails to furnish the return of fringe benefits, if the employer proves that there was a reasonable cause for the said failure.
Amount of penalty payable under section 271FB of the Income Tax Act –
Provisions of section 271FB states that the defaulter would be liable to pay the penalty amount of INR 100 per day till the failure continues.
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in current , FBT is applicable or not