Finance Minister has abolished the FBT(fringe benefit tax ) wef AY 2010-11means from current financial Year ,A welcome step by the Govt but bad news is that now perquisites is now taxable in employee's hands which has been shifted earlier to FBT .There are few important points which relates to this amendments which I will try to cover in following paragraph.
- Applicable date:The finance Minister proposed to abolish this clause from AY 2010-11(FY 2009-10) and onwards assessment year .But many assesses have already deposited the FBT advance tax on 15 June ,2009 for the FY 2009-10.
- what will be the fate of the advance FBT they have deposited?
- will they have to file their return of FBT for Fy 2009-10 to claim the refund?
- Can Advance FBT deposited be adjusted against Advance Income tax at the time of second quarter advance tax .All these issues has not been addressed at all.
- The perquisite value taxable in the hands of the employee will be the difference between the FMV of the specified security or sweat equity shares on the date on which the option is exercised and the amount actually paid by/ recovered from the employee. FMV will be computed in accordance with the method to be prescribed.
- Presently, in case of shares/ debentures/ warrants acquired under an ESOP prior to enactment of FBT, the value considered for computing perquisite in the hands of the employee is considered as cost of acquisition(for calculating capital gain) on sale. Now, FMV considered for computing the perquisite value will be considered as cost of acquisition on sale of such specified security or sweat equity shares.
- Now employee have to pay tax at on FMV-amount paid for ESOP on the date of option even though he had not realized any thing means has not sold any share or shares may have lock in period before which it can not be sold.
- Meals ,Lunch and refereshments to employees subject to some exemption as prescribed
- Travelling ,Touring,accommodation
- Gift ,voucher Token
- Credit card payment by employer on behalf of employee
- Club expenses.
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