Payment of FBT

The FBT is to be paid in advance during any financial year in respect of the current fringe benefits which would be chargeable to tax in the assessment year following that financial year. The employer is required to pay advance tax at the rate of 30% of the current fringe benefits paid or payable in each quarter. The advance tax is to be paid on or before the 15th of the month following that quarter. However, in the case of the last quarter ending on the 31st of March of the financial year, the advance tax shall be payable on or before the 15th day of March of that year. The advance tax for the first three quarters is to be paid on the basis of actual expenditure incurred in each quarter. However, the last installment of the advance tax may be paid on an estimate basis, as the same has to be paid before the closure of the financial year.

Failure to pay advance tax for any quarter, or payment less than 30% of the value of fringe benefits in that quarter, will attract interest at the rate of 1% on the shortfall, for each month or part of the month for which such shortfall continues.

Section 44AD, AE, and AF provides for presumptive taxation of certain assessees, viz., civil contractors, transporters and retail traders. In the cases of these three categories of assessees, income is presumed at a fixed rate, and the provisions of S. 44AA relating to the maintenance of books of accounts do not apply to such assessees, which means the assessee declaring his income under the Presumptive Taxation method is not required to maintain books of accounts. Fringe benefit tax presumes maintenance of books of accounts, which contradicts with the wordings of these three sections of presumptive taxation.

The fringe benefit tax is a self-contained law. Chapter XII-H, with Sections from 115W to 115WL, contain the definition section, the charging section, the procedure for filing of return, assessment, and payment of tax, interest etc. In effect, this is the creation of a whole new law, for taxing expenditure. The ostensible purpose of the law is to adopt a two-pronged approach to the taxation of fringe benefits under the Income-Tax Act.

Perquisites which can be directly attributable to the employees will continue to be taxed in their hands in accordance with the existing provisions of section 17(2) of the Income-Tax Act and subject to the method of valuation outlined in rule 3 of the Income-Tax Rules. In cases, where attribution of the personal benefit poses problem, or for some reasons, it is not feasible to tax the benefits in the hands of the employee, it is proposed to levy a separate tax known as the fringe benefit tax on the employer on the value of such benefits provided or deemed to have been to the employees. (Memorandum to the Bill).

Return of FBT

An employer who has paid or made provision for payment of fringe benefits to his employees during the previous year is required to furnish a return of fringe benefits in the prescribed form and manner to the Assessing Officer before the due date. In the case of a company or an employer, other than a company whose accounts are required to be audited, the due date is the 31st of October of the assessment year. In the case of any other employer, the due date for filing the return of fringe benefits is the 31st of July of the assessment year. After the due date, the Assessing officer may issue a notice to the assessee requiring him to furnish a return in the prescribed form and manner within a period of thirty days.

Failure to furnish a return of fringe benefits or delayed filing of such return will result in the levy of interest at the rate of 1% for each month of delay or till the assessment is made, on the amount of tax on the value of fringe benefits.