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The Finance Minister has introduced the Fringe Benefits Tax which will be at the rate of 30 per cent on an appropriately defined base to tax the perquisites. The Minister said that there are many perquisites disguised as fringe benefits and escape tax. Neither the employer nor the employee pays any tax on these benefits which are certainly of considerable material value. At present, where the benefits are fully attributable to the employee they are taxed in the hands of the employee, that position will continue. In addition, the Finance Minister proposes that 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. However, transport services for workers and staff and canteen services in an office or factory will be outside the tax net.
SB/MVVS/NVN/KKA
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