Fringe Benefit Tax

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K R Sivaraman (Querist)

06 April 2009 Hi,

We are software house and we are in the process of restructuring salaries to reduce tax burden.

One of the ways we will be following is to bring in more reimbursements for employees, which is covered by FBT and not taxable to staff.

The reimbursements are
- Petrol Bills, vehicle Maintenance, Entertainment expenses etc.

My query is
- Can this FBT be recovered from the staff officially (means showing it as part of the salary break up)

Regards

Sivaraman

chetan soni

chetan soni (Expert)

06 April 2009 yes, it can be recover from employees.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

07 April 2009 It may not work well.

The assessing officer if he says that since fbt is recovered it will become employee salary and if he reopens the employees files then it will have adverse effect on your company.

This is not a good idea. Kinldy rework again.

K R Sivaraman

K R Sivaraman (Querist)

07 April 2009 Dear Mr Srinivasulu,

Got your point.
One option which I can think off is
- Include it as taxable salary for the employee and pay tax on the same

Another option is
- Suppose as part of the restructuring, we reduce the salary by the FBT amount and only pay the balance to the employee and the FBT portion is paid to the tax authorities. (no recovery of FBT from employee), will it stop the tax officer from reopening employee files.

Also, if somebody has a better option, please let me know

Many thanks & regards

Sivaraman

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