SURCHARGE ON FBT APPLICABLE ON WHICH AMOUNT.

Qus.whether surcharge @ 10 % is applicable on FBT on Fringe Benefit provided by the Firms .If yes than whether it is applicable on the firm who has income more than 10 lacs or its applicable on from starts irrespective of the income by the firm.


Ans: I quote below from Chapter II, pertaining to Rates of Tax, of the Finance Bill 2008

[Provided also that in respect of any fringe benefits chargeable to tax under section 115WA of the Income-tax Act, income-tax computed under this sub-section shall be increased by a surcharge, for purposes of the Union, calculated—

(a) in the case of every association of persons and body of individuals, whether incorporated or not, at the rate of ten per cent of income-tax where the fringe benefits exceed ten lakh rupees;

(b) in the case of every firm, artificial juridical person referred to in sub-clause (v) of clause (a) of section 115W of the Income-tax Act, and domestic company, at the rate of ten per cent. of such
income-tax;

(c) in the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such income-tax.]

Although the FA 2007 had exempted firms and companies from paying surcharge if their total income didn't exceed Rs 1 crore, this benefit hadn't been extended to the FBT. The AOPs and BOIs, however, won't pay any Surcharge if the value of their fringe benefit didn't exceed Rs 10 lacs. The government obviously was reluctant to extend the largesse of doing away with SC up to a TI of Rs 1 crore to the fringe benefits of firms/companies as well, because the fringe benefits would cross Rs 1 crore in a very few cases.

So irrespective of the value of the fringe benefits provided by them, all firms and companies have to shell out SC on FBT.


Thanks,
CA Sanjeev Bedi