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Question: What is FBT (Fringe Benefit Tax)?

Answer: The tax payable on a non-salary benefit provided to an employee or an associate of the employee. The employer is liable to pay any FBT and may choose to recover the FBT amount from the employee.

The tax payable on a non-salary benefit provided to an employee or an associate of the employee. The employer is liable to pay any FBT and may choose to recover the FBT amount from the employee.
Source: CoolInterview.com

The Finance Act 2005 has introduced a new tax called ‘Income-tax on fringe benefits’ w.e.f. 01.04.2006. This shall be in the form of additional income tax levied on fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year.

The following items were covered:

Employer's expenses on entertainment, travel, employee welfare and accommodation. The definition of fringe benefits that have become taxable has been significantly extended. The law provides an exact list of taxable items.
Employer's provision of employee transportation to work or a cash allowances for this purpose.
Employer's contributions to an approved retirement plan (called a superannuation fund).
Employee stock option plans (ESOPs) have also been brought under fringe benefits tax from the fiscal year 2007–08.
Source: CoolInterview.com

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