FBT

Instead of catching each and every employee and finding out benefits enjoyed by the employee, the employers are taxed for the expenses incurred by them for providing fringe benefits (including deemed benefits) to their employees

The taxation of perquisites -- or fringe benefits -- provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefit tax Any benefits -- or perks -- that employees (current or past) get as a result of their employment are to be taxed, but in this case in the hands of the employer. FBT is charged , so that employer should concentrate more on business expense rather than incurring expenses on staff welfare

FBT is basically benefits provided by the employer to the employees which are also called deemed benefits.

The logic behind FBT is that when an employer incurs some expenditure for his business, a small portion of that expenditure is also enjoyed by the employees for their own personal benefit.Such personal benefit cannot be quantified exactly and allocated individually to each employee (in case of deemed FBs).So FBT is levied as a presumptive tax. it presumes that a certain percentage (as specified)of the expenditure has been utilised by the employees for personal use.The government is concerned with the tax. Since employees cant be held individually, it is the employer who nhas to take the burden.

As per my view, when the companies started spending huge money on the employees and giving benefit to them, (in a way for retaining them), they claim the expense as a business expense which the A.O may not deny deduction of as ultimately it is spent in the business (though not directly adding productivity to it). the revenue think it to tax other way round by way of benefit to employees.