FBT refund — whether available to employees
My company is paying vehicle running expenses for four-wheelers up to Rs. 7,000 and for two-wheelers up to Rs. 2,000. It collects 7 per cent of such amount as reimbursement of FBT (fringe benefit tax) payable by them. Now that FBT is abolished from 2010-11, should the amount collected from the employees during the financial year 2009-10 be refundable? I believe that the amount received by us would continue to be exempt. Is the inference correct?
FBT is payable only by the company and not by the employee.
It is only in the case of shares and securities allotted by way of stock option or sweat equity on or after April 1, 2007, FBT is levied on the value of the same on the employer, who is authorised to recover from the employees at his option.
It is only such FBT received from the employees under Sec. 115WC(1)(ba) read with Sec. 115WB(1)(d) receivable from the employee that may have to be refunded on abolition of FBT.
Any refund of the amount otherwise collected is a matter between the employer and the employee, since neither the collection nor refund is a matter of income-tax law, where it is unauthorised.
As for liability on the amounts now received for assessment year 2010-11 after the FBT regime, one has to await Rule 3 to be notified. The pre-existing rule prescribed a formula for such perquisites.
Such rule may be substantially restored.
S. RAJARATNAM
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