While corporate entities will have reason to cheer that the fringe benefit tax (FBT) on perks given to employees has been done away with in Budget 2009-10, individuals may not have reason to be so happy after all. The government is planning to tax the perks extended by organisations to their employees just as it was done in the pre-FBT years before 2005. The list of perks that will be taxed is likely to remain more or less the same, according to senior finance ministry officials.

“We are planning to draw out a list of the perks, which will be issued soon. The notification is expected to come in a few days,” the official told The Indian Express. As a result, individuals will have to shell out more funds towards the government’s tax kitty.

Perks that are expected to be taxed include car provided by employer or the running expenses of a personal car that are re-imbursed by the employer, domestic help paid by employer, free or concessional education, any gift vouchers, food or non-alcoholic beverage given to the employee, membership fees of clubs paid on employer credit cards, value of travelling or tour paid for by employer for holiday of employee, among others.

“The perquisite value of these will be computed and added to the total annual income of the employee, which will then be taxed as per the set income tax rules and slabs specified in those rules,” said KPMG executive director Vikas Vasal. However, there are some items that will kick up a debate again, he adds. For instance, allowance for books and journals for the employee’s enrichment is one such case where there have been arguments at length over whether it will benefit the employer or accrues personal benefit to the individual.

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