The Union Budget for 2009-10 has proposed to abolish the fringe benefit tax (FBT), the tax on employees’ benefits at the cost of the employers. The saving for the India Inc is estimated to be around Rs 2,100 crore based on the fringe benefit tax paid by all listed companies in 2007-08.
The State Bank of India, the public sector banking giant, which paid fringe tax benefit of Rs 142 crore in the financial year 2008-09 expected to be major beneficiary of abolitions of FBT. Larsen & Toubro, ONGC, Reliance Industries, Bharti Airtel, Hindustan Unilever, ICICI Bank, SAIL, Cairn India and Indian Oil would save between Rs 30 and Rs 70 crore if fringe benefit tax abolished .
If a benefit is fully attributable to an employee, it is taxed in the hands of the employee. Where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees, they shall be taxed in the hands of the employer, and this tax is called fringe benefit tax.
With the proposals to abolish fringe benefit tax ( fbt abolished ) , the employers now can spend more on the employee entertainment, welfare, conference, conveyance, company car, sales promotion, hospitality, hotel & lodging, telephone and maintenance of accommodation. there is no salary increase due to fbt abolished, ie no ctc increase
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