Fringe benefit tax on some perks

NEW DELHI: Employers giving perks other than conveyance and canteen allowances will now have to pay a Fringe Benefit Tax at the rate of 30 per cent.

Announcing the new tax which will be on an "appropriately defined base", Finance Minister P Chidambaram said there are many perquisites disguised as fringe benefits escaping tax.

Neither the employer nor the employee pays any tax on these benefits which are of considerable material value, he said.

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 Minister has proposed 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, he said.