Fringe benefit tax

The tax on fringe benefits is imposed on those that the employer offers to its employees. Employers are required to pay this fee to the government in exchange for providing these fringe benefits. The fiscal year 2010–2011 saw the elimination of this. Here are detailed notes on section 12a.

Let's first discuss the definition of fringe benefits before discussing a tax on them. A fringe benefit is, to put it simply, anything that a company offers to an employee that is not covered by the employee's wage. This covers items like reimbursements, travel expenses, business cards, donations to retirement accounts, etc. Basically, everything the business pays out to the employee is referred to be a fringe benefit, including travel expenses, meals, and shares granted for free or at a discount.

What is the Fringe Benefits Tax?

Since FY 2005–06, employers have been subject to a fringe benefits tax, which is essentially a tax on the perks they give their workers as a perk. Employers were required to pay a levy to the government in exchange for offering those benefits. After significant discussion, India's fringe benefits tax was ultimately repealed in 2009 by the Finance Act, which took effect in the next fiscal year (FY) 2010–11.

Rate of Fringe Benefit Tax

When it was in effect, a flat 30% amount of the benefit that the employer had given to the employee was the tax rate.

Exemptions from Fringe Benefit Taxes

There were certain exemptions available under this tax when it was in force. These included items such as:-

(a) An exemption on sums paid by a business to a professional to advertise that business and the products/services it offered.

(b) The costs incurred by an employer to provide transportation for staff members to and from work.

(c) A sum up to Rs. 1 lakh per employee was excluded from tax if an employer made contributions to a superannuation fund for a worker.

(d) Additional expenditures that an employer could pay when offering employees entertainment in the form of organised games and outings or travel solutions were also excluded.

Here is good notes on 80g exemption.