Finance Act, 2005 has introduced a new tax in the form of Fringe Benefit Tax (FBT). FBT is a tax payable by the employer on benefits (provided/ deemed) that employees (past or present) receive as a consideration of their employment. FBT is leviable on every employer excluding individuals/ Hindu Undivided Family and certain institutions enjoying certain exemptions.

Certain expenses are directly covered within the ambit of FBT. In respect of expenditure such as entertainment expenditure, conferences, etc. certain percentages of these expenses have been deemed as fringe benefits, upon which FBT is leviable. FBT will be leviable at the rate of 30 per cent plus applicable surcharge of 2.5 per cent or 10 per cent and education cess of 2 per cent on the tax including surcharge.

The due dates for the payment of FBT in the case of a company or a person whose accounts are required to be audited under the Act, is the 31st of October following the end of the financial year. In any other case, the due date is the 31st of July following the end of the financial year.

The manner of payment of FBT is similar to that of advance tax, FBT being paid or payable in each quarter, on or before the 15th day of the month following such quarter, except for the quarter ending on 31 March, in case of which the FBT will be payable on or before 15 March of the relevant financial year.