FBT

TDS is deductible on ESOP

Income Tax - Employee Stock Options Plans (ESOPs) and its different variants like Employees Stock Purchase Plans, Stock Appreciation Rights, Stock Awards, etc, have been used by employers to attract, retain and motivate employees. ESOPs have been popular primarily in the knowledge-based industries like information technology, biotechnology, etc. Howev...

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FBT First Instalment of June Quarter Paid-Refund or Adjustment?

Income Tax - The Finance Bill (No.2), 2009 could be presented on Sixth of July, 2009 due to formation of new government but by that time many corporate assessees had already paid the first instalment under the belief that the Finance Bill has yet to be accorded consent by the President and is not final. The advance tax in respect of FBT which was paya...

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New perquisite valuation rules to hit employees with company cars

Income Tax - New perk rules :- Under the new perquisite rules, a distinction is to be made between the car owned by the employer and the car owned by the employee, as the value of the tax perquisite in the two scenarios varies considerably. Even though there could be different permutation and combination, under which the car benefit could be provided ...

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Taxability of ESOP for Assessment year 2010-2011

Income Tax - Employee stock options (ESOPs) is a significant employer-granted benefit that too is subject to the above FBT /perquisite-based taxation system. In fact, it almost seems as if the authorities cannot quite make up their minds as to how they wish to tax shares given to employees by their employers on a concessional basis. Having been subjec...

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Salary Income -Valuation of Perquisites

Income Tax - Valuation of Perquisites under Rule 3 of Income Tax Rule 1962 read with sub section 2 of section 17 of Income Tax Act, 1961 (As Revised wide Income Tax (Thirteenth Amendment) Rules. 2009). The Finance (No. 2) Act, 2009, has withdrawn the levy of Fringe Benefit Tax ("FBT") on expenditure incurred by an employer on or after 1 April 2009. Co...

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17.85 Percent Increase in Direct Tax Collections During April-November Crosses 50 percent of be Target of Rs.4,30,000

Income Tax - During the period April-November 2010, net direct tax collections stood at Rs.2,16,628 crore, up from Rs.1,83,822 crore during the same period last fiscal, registering a growth of 17.85 percent and crossing 50 percent of the BE target of Rs.4,30,000 crore for fiscal 2010-11....

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Net Direct Tax Collections Register 19.09 Percent Growth

Income Tax - Net direct tax collections during the period April-September 2010 stood at Rs.1,81,758 crore, up from Rs.1,52,625 crore in the same period last fiscal, registering a growth of 19.09 percent in H-1 against the Budgeted annual growth target of 13.67 pe...

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Direct tax Collections Register 15.75% Growth During first four months of present Fiscal

Income Tax - Net direct tax collections during first four months of the present fiscal (up to July 2010) stood at Rs.85,647 crore, up from Rs.73,990 crore in the same period last fiscal, registering a growth of 15.75 percent. Growth in Corporate Income Tax was 20.95 percent (Rs.51,627 crore as against Rs.42,685 crore), while Personal Income Tax (inclu...

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Direct tax collections register 7.5 per cent growth upto February

Income Tax - Net direct tax collections during first eleven months of the present fiscal (up to February 2010) stood at Rs.2,78,373 crore, up from Rs.2,58,902 crore in the same period last fiscal, registering a growth of 7.52 percent. Growth in Corporate Taxes was 10.89 percent (Rs.1,80,318 crore as against Rs.1,62,617 crore), while Personal Income Ta...

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Perquisite Valuation rules not considered the inflation and old exempt amount limit been kept

Income Tax - The fringe benefit tax (FBT) was strongly opposed by India Inc, but there is no doubt that it was beneficial to the employees — they did not have to directly bear the tax on many perquisites. The repeal of FBT meant uncertainty on taxation of perks. Thankfully, there are few changes to the valuation rules when compared to the rules that...

Read More

FBT on providing Free Medicine Samples to Doctors by Pharma Companies

PCIT Vs Aristo Pharmaceuticals P Ltd (Bombay High Court) - Since there was no employer-employee relationship between the assessee on one hand and the doctors on the other hand to whom the free samples were provided, the expenditure incurred for the same cannot be construed as fringe benefits to be brought within the additional tax net by levy of fringe bene...

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Uniform Allowance to staff not Taxable under Fringe Benefits

Mumtaz Hotels Limited Vs DCIT (ITAT Kolkata) - Mumtaz Hotels Limited Vs DCIT (ITAT Kolkata) CIT(A) opined that the said clothes were not protective ones and they are not uniforms and not compulsory uniform under the statute. We find that the employees’ uniforms have traditionally been used as a functional necessity. It is noted from the record...

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Exercise of revisional jurisdiction u/s 263 for adjustment of FBT in book profit

Rashtriya Chemicals & Fertilizers Limited Vs. CIT (ITAT Mumbai) - Rashtriya Chemicals & Fertilizers Limited Vs. CIT (ITAT Mumbai) Taxes borne by the assessee on non-monetary perquisites provided to employees forms part of Employee Benefit cost and akin to Fringe Benefit Tax since they are certainly not below the line items since the same are expressively disal...

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Food to employees in office or factory does not form part of fringe benefit

Auckland International Ltd. Vs. C.I.T. (ITAT Kolkata) - It is clear from the provision of section 115WB(2)(B)(i) of the Act that expenditure on food provided by the employer to the employees in an office or factory does not form part of the fringe benefit. ...

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FBT leviable on expense on Sales Promotion, Free Samples, Gift etc

Gujarat Chamber of Commerce & Industry Vs Union of India thro' secretary (Gujarat High Court) - When the language of Section 115WA and 115WB is clear and unambiguous and even the intention of the legislature while enacting sections 115WA and 115WB(2) is very clear i.e. with respect to the deemed fringe benefits, neither there is any scope for either literal and/ or purposive interpretation nor...

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CBDT Press Release on Tax collections during first quarter

Press Release No.402/92/2006-MC - (06/07/2010) - Net direct tax collections during first quarters of the present fiscal (up to June 2010) stood at Rs.68,675 crore, up from Rs.59,465 crore in the same period last fiscal, registering a growth of 15.49 percent. Growth in Corporate Taxes was 21.65 percent (Rs.43,439 crore as against Rs.35,709 crore), ...

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Circular on adjustment of Advance FBT Paid for Assessment Year 2010-11

Circular No. 2/2010-Income Tax - (29/01/2010) - Circular No. 2/2010-Income Tax The Finance Act, 2005 introduced a levy namely Fringe Benefit Tax (FBT) on the value of certain fringe benefits as contained in Chapter XII H (Sections 115 W to 115 WL) of Income Tax Act, 1961. By the Finance (No. 2) Act, 2009 a new Section 115 WM was inserted to abol...

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Government Put Conditions on Issue of Prepaid Meal Card

Notification No. 1/2009 - Income Tax - (05/01/2009) - Notification No. 1/2009 - Income Tax The Finance Act, 2008, w.e.f. from 1 April 2008, introduced a new concept of Electronic Meal Cards (‘EMC’), for the purpose of Fringe Benefit Tax (‘FBT’) on hospitality expenses. Hospitality expenses do not include any expenditure incurred by an employer...

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FBT on ESOPs – CBDT amends Rule 40C

Notification No.11/2008-Income Tax - (18/01/2008) - NOTIFICATION NO 11/2008, Dated: January 18, 2008 Valuation of specified security not being an equity share in the company. 40D. For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security, not being an equity share in a company, on the date on...

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Notification on Valuation of ESOP for FBT

264/2007 - (23/10/2007) - NOTIFICATION NO. 264/2007, DATED 23-10-2007 Valuation of specified security or sweat equity share being a share in the company. 40C. (1) For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security or sweat equity share, being an equity share i...

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Recent Posts in "FBT"

FBT on providing Free Medicine Samples to Doctors by Pharma Companies

PCIT Vs Aristo Pharmaceuticals P Ltd (Bombay High Court)

Since there was no employer-employee relationship between the assessee on one hand and the doctors on the other hand to whom the free samples were provided, the expenditure incurred for the same cannot be construed as fringe benefits to be brought within the additional tax net by levy of fringe benefit tax....

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Uniform Allowance to staff not Taxable under Fringe Benefits

Mumtaz Hotels Limited Vs DCIT (ITAT Kolkata)

Mumtaz Hotels Limited Vs DCIT (ITAT Kolkata) CIT(A) opined that the said clothes were not protective ones and they are not uniforms and not compulsory uniform under the statute. We find that the employees’ uniforms have traditionally been used as a functional necessity. It is noted from the record that the assessee assumed the financial...

Read More

TDS is deductible on ESOP

Employee Stock Options Plans (ESOPs) and its different variants like Employees Stock Purchase Plans, Stock Appreciation Rights, Stock Awards, etc, have been used by employers to attract, retain and motivate employees. ESOPs have been popular primarily in the knowledge-based industries like information technology, biotechnology, etc. Howev...

Read More
Posted Under: Income Tax |

Exercise of revisional jurisdiction u/s 263 for adjustment of FBT in book profit

Rashtriya Chemicals & Fertilizers Limited Vs. CIT (ITAT Mumbai)

Rashtriya Chemicals & Fertilizers Limited Vs. CIT (ITAT Mumbai) Taxes borne by the assessee on non-monetary perquisites provided to employees forms part of Employee Benefit cost and akin to Fringe Benefit Tax since they are certainly not below the line items since the same are expressively disallowed u/s 40(a)(v) and the same do not c...

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Food to employees in office or factory does not form part of fringe benefit

Auckland International Ltd. Vs. C.I.T. (ITAT Kolkata)

It is clear from the provision of section 115WB(2)(B)(i) of the Act that expenditure on food provided by the employer to the employees in an office or factory does not form part of the fringe benefit. ...

Read More

FBT leviable on expense on Sales Promotion, Free Samples, Gift etc

Gujarat Chamber of Commerce & Industry Vs Union of India thro' secretary (Gujarat High Court)

When the language of Section 115WA and 115WB is clear and unambiguous and even the intention of the legislature while enacting sections 115WA and 115WB(2) is very clear i.e. with respect to the deemed fringe benefits, neither there is any scope for either literal and/ or purposive interpretation nor there is any occasion to consider the i...

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TDS not to be be deducted on expenditure on which assessee has paid FBT

Oil and Natural Gas Corporation Ltd. Vs The A.C.I.T. (TDS) (ITAT Ahmedabad)

During the period, when FBT was applicable, appellant considered reimbursements to employees under holiday home scheme to be liable to FBT under section 11 5WB(2)(G), i.e. expenditure for use of hotel, boarding and lodging facilities....

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Expenses liable to be considered as fringe benefits only to extent same are incurred in consideration for employment

Desai Brothers Ltd. Vs. Addl. CIT, Range-1 (ITAT Pune)

First is the issue of entertainment expenditure. The stand of the assessee is that the provisions of FBT can be invoked in respect of expenses which are incurred on employees or their family members but in the present case, as mentioned on page No.5 of the paper book, the entertainment expenses have been incurred for guests of the company...

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17.85 Percent Increase in Direct Tax Collections During April-November Crosses 50 percent of be Target of Rs.4,30,000

During the period April-November 2010, net direct tax collections stood at Rs.2,16,628 crore, up from Rs.1,83,822 crore during the same period last fiscal, registering a growth of 17.85 percent and crossing 50 percent of the BE target of Rs.4,30,000 crore for fiscal 2010-11....

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Posted Under: Income Tax |

Net Direct Tax Collections Register 19.09 Percent Growth

Net direct tax collections during the period April-September 2010 stood at Rs.1,81,758 crore, up from Rs.1,52,625 crore in the same period last fiscal, registering a growth of 19.09 percent in H-1 against the Budgeted annual growth target of 13.67 pe...

Read More
Posted Under: Income Tax |

Direct tax Collections Register 15.75% Growth During first four months of present Fiscal

Net direct tax collections during first four months of the present fiscal (up to July 2010) stood at Rs.85,647 crore, up from Rs.73,990 crore in the same period last fiscal, registering a growth of 15.75 percent. Growth in Corporate Income Tax was 20.95 percent (Rs.51,627 crore as against Rs.42,685 crore), while Personal Income Tax (inclu...

Read More
Posted Under: Income Tax |

CBDT Press Release on Tax collections during first quarter

Press Release No.402/92/2006-MC (06/07/2010)

Net direct tax collections during first quarters of the present fiscal (up to June 2010) stood at Rs.68,675 crore, up from Rs.59,465 crore in the same period last fiscal, registering a growth of 15.49 percent. Growth in Corporate Taxes was 21.65 percent (Rs.43,439 crore as against Rs.35,709 crore), while Personal Income Tax (including STT...

Read More

Direct tax collections register 7.5 per cent growth upto February

Net direct tax collections during first eleven months of the present fiscal (up to February 2010) stood at Rs.2,78,373 crore, up from Rs.2,58,902 crore in the same period last fiscal, registering a growth of 7.52 percent. Growth in Corporate Taxes was 10.89 percent (Rs.1,80,318 crore as against Rs.1,62,617 crore), while Personal Income Ta...

Read More
Posted Under: Income Tax |

Circular on adjustment of Advance FBT Paid for Assessment Year 2010-11

Circular No. 2/2010-Income Tax (29/01/2010)

Circular No. 2/2010-Income Tax The Finance Act, 2005 introduced a levy namely Fringe Benefit Tax (FBT) on the value of certain fringe benefits as contained in Chapter XII H (Sections 115 W to 115 WL) of Income Tax Act, 1961. By the Finance (No. 2) Act, 2009 a new Section 115 WM was inserted to abolish the FBT with effect from Assessment ...

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FBT First Instalment of June Quarter Paid-Refund or Adjustment?

The Finance Bill (No.2), 2009 could be presented on Sixth of July, 2009 due to formation of new government but by that time many corporate assessees had already paid the first instalment under the belief that the Finance Bill has yet to be accorded consent by the President and is not final. The advance tax in respect of FBT which was paya...

Read More
Posted Under: Income Tax |

New perquisite valuation rules to hit employees with company cars

New perk rules :- Under the new perquisite rules, a distinction is to be made between the car owned by the employer and the car owned by the employee, as the value of the tax perquisite in the two scenarios varies considerably. Even though there could be different permutation and combination, under which the car benefit could be provided ...

Read More
Posted Under: Income Tax |

Perquisite Valuation rules not considered the inflation and old exempt amount limit been kept

The fringe benefit tax (FBT) was strongly opposed by India Inc, but there is no doubt that it was beneficial to the employees — they did not have to directly bear the tax on many perquisites. The repeal of FBT meant uncertainty on taxation of perks. Thankfully, there are few changes to the valuation rules when compared to the rules that...

Read More
Posted Under: Income Tax |

Taxability of ESOP for Assessment year 2010-2011

Employee stock options (ESOPs) is a significant employer-granted benefit that too is subject to the above FBT /perquisite-based taxation system. In fact, it almost seems as if the authorities cannot quite make up their minds as to how they wish to tax shares given to employees by their employers on a concessional basis. Having been subjec...

Read More
Posted Under: Income Tax |

New perquisites valuation rules for Assessment Year 2010-11 are replica of old rules

The salaried class, reeling under the inflationary pressures, has suffered yet another setback this holiday season with the announcement of new perquisite valuation rules by the Central Board of Direct Taxes (CBDT) on December 18. The new rules have come in the wake of the abolishment of fringe benefit tax (FBT) by finance minister Pranab...

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Posted Under: Income Tax |

Salary Income -Valuation of Perquisites

Valuation of Perquisites under Rule 3 of Income Tax Rule 1962 read with sub section 2 of section 17 of Income Tax Act, 1961 (As Revised wide Income Tax (Thirteenth Amendment) Rules. 2009). The Finance (No. 2) Act, 2009, has withdrawn the levy of Fringe Benefit Tax ("FBT") on expenditure incurred by an employer on or after 1 April 2009. Co...

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Posted Under: Income Tax |

Valuation of Perquisites other then accommodation, motor car and ESOP for financial year 2009-2010

For the sake of convenience, the attached tables summarises the valuation rules for all perquisites prescribed in the new rule 3 except the valuation of perquisites in respect of accommodation, motor car and ESOP which are mentioned separately by us and link for the same is been given below . It may be noted that for most perquisites the...

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Posted Under: Income Tax |

New Perquisite rules in respect of accommodation / house property provided by employer including accommodation in hotel

The much awaited new rules have now been notified by The Central Board of Direct Taxes (CBDT) vide Notification dated 18 December 2009. The amended provisions will be retrospectively effective from 1 April 2009 onwards. The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) ha...

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Posted Under: Income Tax |

Perquisites for salaried will be taxed from April 2009

Salaried employees may burn a hole in their pockets with the Government all set to impose tax on all perks –residential accommodation, conveyance and others -- paid for by the company, under a new law that replaces the already abolished Fringe Benefit Tax. Perquisites given by the employer such as residential accommodation, conveyance...

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Posted Under: Income Tax |

Absence of tax free climate affected inflows of foreign investment in the shipping sector

Absence of tax-free climate has affected inflows of foreign investment in the shipping sector, reducing its competitiveness, the government informed Rajya Sabha. “The Indian flag suffers from certain barriers in terms of tax and duty structures which may have impeded the growth of foreign direct investment (FDI),” shipping minister GK...

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Posted Under: Income Tax |

Direct tax collections register growth of 3.71% till November 2009

Net direct tax collections during first eight months of the present fiscal (up to November 2009) stood at Rs.1,83,822 crore, up from Rs.1,77,251 crore in the same period last fiscal, registering a growth of 3.71 percent. Growth in Corporate Taxes was 3.17 percent (Rs.1,13,210 crore as against Rs.1,09,735 crore), while Personal Income Tax ...

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Posted Under: Income Tax |

Valuation of perquisites / fringe benefits after the abolition of FBT

With the abolition of FBT, a question arises as to the tax-treatment to be given to a number of perquisites / fringe benefits, which were earlier liable to FBT and therefore, not chargeable as perquisites in the hands of the employees, in view of the provisions of the erstwhile section 17(2)(vi) of the Act....

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Posted Under: Income Tax |

Government may soon clarify in respect of FBT paid for A.Y. 2010-2011

A mechanism may be on the anvil to help companies to reclaim the fringe benefit tax they had paid for the first quarter along with advance corporate tax, as the government goes about implementing the budget proposal to abolish the levy with retrospective effect from April 1, 2009. Companies may be able to seek a refund […]...

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Posted Under: Income Tax |

FBT abolished and Perquisites earlier covered under FBT become taxable in the hand of Employees

Currently, certain prescribed fringe benefits provided by an employer to his employees are liable to FBT in the hands of the employer. Such fringe benefits are not included within the scope of ‘perquisites’ as defined in section 17. As FBT will now be abolished, ‘perquisites’ will include the following: 1. Presently, FBT is levied...

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Posted Under: Income Tax |

Major Changes / Amendments in Income Tax and Wealth-tax Made in Budget 2009-2010

No changes made in the Corporate Tax rates. For the Limited Liability Partnerships, the provisions of Income Tax are the same as applicable in the case of Partnership Firms formed as per the Indian Partnership Act’ 1932....

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Posted Under: Income Tax |

Frequently Asked Question on fringe benefit tax (FBT) PART- 4

76. Whether expenditure incurred on prizes/rewards to employees for achievements is liable to FBT? Any expenditure incurred on prizes/rewards to employees for achievements would fall within the scope of clause (E) of sub -section (2) of section 115WB relating to employee welfare and accordingly be liable to FBT. 77. Whether expenditure in...

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Posted Under: Income Tax |

Frequently Asked Question on fringe benefit tax (FBT) PART- 3

51. Whether expenditure incurred during in-house employee training would be considered as conference expense and liable to FBT? The FBT is not envisaged for levy on the expenditure incurred for the purposes of imparting in-house training to employees. However, FBT would be payable on any expenditure incurred towards food and beverage, tou...

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Posted Under: Income Tax |

Frequently Asked Question on fringe benefit tax (FBT) PART- 2

32. Whether gross expenses or net expenses (i.e. net of recovery) are to be considered for the purposes of FBT? For example, part of the expenses on various items like travel, may be recovered from the employees. Therefore, whether FBT would be levied on the gross travel expenditure or on the ‘net’ travel expenditure’? W...

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Posted Under: Income Tax |

Frequently Asked Question on fringe benefit tax (FBT) PART- 1

The Central Board of Direct Taxes has issued a list of frequently asked questions with answers on Fringe Benefit Tax, clarifying some issues raised by the trade and industry at different fora after the presentation of the Finance Bill, 2005 and also after its enactment. 1. What are the prerequisites for the levy of FBT? […]...

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Posted Under: Income Tax |

Commerce department asked for removal of fringe benefit tax on exporters

Commerce department has asked for the removal of fringe benefit tax (FBT) on exporters in its list of key reform proposals to be included in an ambitious package being readied by officials for the new government’s 100-day reform agenda. It has asked for removal of this tax imposed on exporters as it acts as a […]...

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Posted Under: Income Tax |

Finmin refused to relax FBT norms for exporters

The Finance Ministry has turned down a Commerce Ministry proposal to provide relaxation to exporters, reeling under the impact of the global financial meltdown, from payment of FBT, saying such benefits cannot be granted to one section of taxpayers. The issue of relaxing the Fringe Benefit Tax (FBT) norms for foreign travel undertaken for...

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Posted Under: Income Tax |

Fringe Benefit Tax on ESOP'S

INTRODUCTION The proviso to section 17(2)(iii) has been omitted. So far the value of any benefit provided by the company free of cost or at a concessional rate to its employees by way of allotment of shares, debentures or warrants, directly or indirectly under any Employees Stock Option Plan or Scheme of the Company offered to […]...

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Posted Under: Income Tax |

Satyam effect: I-T department to increase staff strength

In the wake of the Satyam fiasco, the Income-Tax department now wants more manpower and technical assistance for its investigation wing and closer scrutiny for TDS returns. The department, in its recent report being prepared for cadre review and restructuring, being done after eight years, will submit these suggestions to the government. ...

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Posted Under: Income Tax |

Taxman probes Satyam exemptions

Though happy with the fact that troubled IT major Satyam Computer Services had paid income tax on unreal profits — as claimed by its chairman B Ramalinga Raju — the income-tax department is planning to re-examine the exemptions the company had claimed under the income tax regulations....

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Posted Under: Income Tax |

Government Put Conditions on Issue of Prepaid Meal Card

Notification No. 1/2009 - Income Tax (05/01/2009)

Notification No. 1/2009 - Income Tax The Finance Act, 2008, w.e.f. from 1 April 2008, introduced a new concept of Electronic Meal Cards (‘EMC’), for the purpose of Fringe Benefit Tax (‘FBT’) on hospitality expenses. Hospitality expenses do not include any expenditure incurred by an employer on provision of EMCs1, which fulfils th...

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CBDT Issues Instructions For Scrutiny Of FBT Returns

It has been decided that in all the Corporate cases selected for scrutiny as per the guidelines contained in the Action Plan document 2008-09 which have returned income of Rs.5 crore or more and where provisions of FBT apply, assessment order shall also be passed under section 115WE after scrutiny of all such cases....

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Posted Under: Income Tax |

Foreign nationals working in India will be exempt from fringe tax

Foreign nationals working in India will be exempt from fringe benefit tax (FBT) on the cost of transportation from their residence to the workplace, according to a Supreme Court ruling. Responding to a petition filed by an Australian firm, R&D Falcon (A) PTY, the apex court overruled an earlier decision by the Authority for Advance Ruling...

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Posted Under: Income Tax |

Budget Highlights on Taxation Front

Due Date of Tax Audit Preponed to 30th September. No change in ceiling of Rs. 40 Lacs under section 44AB. DIRECT TAXES -No change in corporate income tax rate. Income Tax exemption rates raised from 1.1 lakhs to 1.5 lakhs across the board. Exemption limit for women raised to 1.8 lakhs and for senior citizen raised to 2.25 Lakh. Fresh Faci...

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Posted Under: Income Tax |

FBT on ESOPs – CBDT amends Rule 40C

Notification No.11/2008-Income Tax (18/01/2008)

NOTIFICATION NO 11/2008, Dated: January 18, 2008 Valuation of specified security not being an equity share in the company. 40D. For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security, not being an equity share in a company, on the date on which the option vests with the employe...

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FBT on ESOP – CBDT clarifications

The Finance Act, 2007 changed the taxation of securities issued by an employer to its employees from April 1, 2007 (assessment year 2008-2009), by levying fringe benefit tax (FBT) on the employer in respect of securities, defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956, including Employees' Stock Options (ESOP),...

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Posted Under: Income Tax |

Is FBT payable on ESOPs involving foreign shares?

THE Notification No. 264/2007 dated October 23, 2007 issued by the CBDT, specifying the Income-tax (12 th Amendment) Rules, 2007 seems to have brought in a lot of welcome clarity in terms of the methodology to be adopted for the determination of the Fair Market Value of ESOPs issued by Indian Companies, listed or unlisted. However, the qu...

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Posted Under: Income Tax |

Tax on concessional rent accommodation – CBDT notifies amendment to Rule 3

VALUATION of perquisites has always been a bone of contention. To overcome many of such irritants, the Finance Minister in the Finance Act, 2007 had inserted a deeming provision to define concession in the matter of rent for the purpose of determining the perquisite value. It has also reduced the rate of valuation of perquisite in the nat...

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Posted Under: Income Tax |

Management Representation Letter on Fringe Benefit Tax Audit

We have identified and appropriately classified all such payments/expenditures, which are subject to fringe benefit tax in terms of sections 115WA and 115WB of the Income-tax Act, 1961. There are no unrecorded payments/expenditure which would have otherwise qualified for being subjected to the fringe benefit tax. We acknowledge that we ar...

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Posted Under: Income Tax |

ESOP norms – Many issues await clarification

The taxman may have to consider naming some top ten stock exchanges around the world as ‘recognised stock exchanges’ for the purpose of Rule 40C, suggest Mr Sanjiv Agrawal and Mr Amitabh Singh, Partners, Ernst & Young, commenting on the new income-tax rule on thevaluation of ESOPs (employee stock options) for the purpose of FBT (fring...

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Posted Under: Income Tax |

FBT on ESOP should not apply to foreign securities?

Does the FBT law intend to cover securities under SCRA? I don’t think so. We have to look at the rationale of levy of FBT. In a booming economy, accompanied with a vibrant stock market, corporates have figured out a creative way to compensate their employees through the ESOP scheme. It could be ESOP of a listed company or an unlisted co...

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Posted Under: Income Tax |

Five key issues in FBT guidelines on ESOPs

As you may be aware, the Finance Act, 2007 amended the provisions of the Income-tax Act, 1961 to provide that employers will be liable to pay FBT (fringe benefit tax) on the value of ESOPs granted to employees as and when the ESOPs were allotted or transferred to the employees. The value of ESOPs for the purposes of levy of FBT shall be t...

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Posted Under: Income Tax |

Notification on Valuation of ESOP for FBT

264/2007 (23/10/2007)

NOTIFICATION NO. 264/2007, DATED 23-10-2007 Valuation of specified security or sweat equity share being a share in the company. 40C. (1) For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the op...

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Is FBT Applicable on Charitable Trusts?

FBT is not payable by a trust, fund or institution if its income is exempt under section 10(23C) or it is registered under section 12AA of the Income-tax Act. Therefore, a company registered under section 25 of the Companies Act will also not be liable to FBT if its income is exempt under section 10(23C) or such company is registered unde...

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Posted Under: Income Tax |

The costly ambiguity surrounding FBT on ESOPs

How is the FBT to be valued? And when is the tax payable? The fringe benefit is to be valued at the fair market value (FMV) of the security or sweat equity share on the date of vesting of the option minus any amount paid by / recovered from the employee for such security or shares. The FMV is to be determined a s per the method to be pre...

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Posted Under: Income Tax |

Due Date Table for Income Tax and associated matters:

Return of Income Tax [with/without FBT Return]: 1. Person not required to be audited - 31st July. 2. Person required to be audited - 31st October. Payment of Advance Taxes of Income Tax - Individual/Firms: * 1st Payment of 30% - 15th September. * 2nd Payment of 60% - 15th December. * 3rd Payment of 10...

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Posted Under: Income Tax |

Extension of Due Date of Payment of The First and Second Installment of Advance FBT on ESOPS

EXTENSION OF DUE DATE OF PAYMENT OF THE FIRST AND SECOND INSTALLMENT OF ADVANCE FBT ON ESOPS (12/09/2007)

By virtue of the provision of clause (d) of sub-section (1) section 115 WB, introduced by Finance Act, 2007, an employer is liable to pay Fringe Benefit Tax on any consideration for employment provided by way of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by such employer free of cost or ...

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Filing Return of Income under the new ITR Form Series (A simple guide)

Form No. 16A (received from all the payers who have deducted tax): You will first have to get this form collected from the parties who have deducted tax while making payment to you during the year. This includes banks and companies (with whom you have kept fixed deposits), parties to whom you have given loan, tenant to whom you have rente...

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Posted Under: Income Tax |

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