Section 115WB of Income Tax Act "Fringe benefits"
115WB. (1) For the purposes of this Chapter, "fringe
benefits" means any consideration for employment provided by
way of-
(a) any privilege, service, facility or amenity, directly or
indirectly, provided by an employer, whether by way of
reimbursement or otherwise, to his employees (including
former employee or employees);
(b) any free or concessional ticket provided by the employer
for private journeys of his employees or their family
members;
(c) any contribution by the employer to an approved
superannuation fund for employees; and
(d) any specified security or sweat equity shares allotted
or transferred, directly or indirectly, by the employer free
of cost or at concessional rate to his employees (including
former employee or employees).
Explanation.-For the purposes of this clause,-
(i) "specified security" means the securities as defined in
clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) and, where employees'
stock option has been granted under any plan or scheme
therefor, includes the securities offered under such plan or
scheme;
(ii) "sweat equity shares" means equity shares issued by a
company to its employees or directors at a discount or for
consideration other than cash for providing know-how or
making available rights in the nature of intellectual
property rights or value additions, by whatever name called.
(2) The fringe benefits shall be deemed to have been
provided by the employer to his employees, if the employer
has, in the course of his business or profession (including
any activity whether or not such activity is carried on with
the object of deriving income, profits or gains) incurred
any expense on, or made any payment for, the following
purposes, namely:-
(A) entertainment;
(B) provision of hospitality of every kind by the employer
to any person, whether by way of provision of food or
beverages or in any other manner whatsoever and whether or
not such provision is made by reason of any express or
implied contract or custom or usage of trade but does not
include-
(i) any expenditure on, or payment for, food or beverages
provided by the employer to his employees in office or
factory;
(ii) any expenditure on or payment through paid vouchers
which are not transferable and usable only at eating joints
or outlets;
(iii) any expenditure on or payment through non-transferable
pre-paid electronic meal card usable only at eating joints
or outlets and which fulfils such other conditions as may be
prescribed;
(C) conference (other than fee for participation by the
employees in any conference).
Explanation.-For the purposes of this clause, any
expenditure on conveyance, tour and travel (including
foreign travel), on hotel, or boarding and lodging in
connection with any conference shall be deemed to be
expenditure incurred for the purposes of conference;
(D) sales promotion including publicity:
Provided that any expenditure on advertisement,-
(i) being the expenditure (including rental) on
advertisement of any form in any print (including journals,
catalogues or price lists) or electronic media or transport
system;
(ii) being the expenditure on the holding of, or the
participation in, any press conference or business
convention, fair or exhibition;
(iii) being the expenditure on sponsorship of any sports
event or any other event organised by any Government agency
or trade association or body;
(iv) being the expenditure on the publication in any print
or electronic media of any notice required to be published
by or under any law or by an order of a court or tribunal;
(v) being the expenditure on advertisement by way of signs,
art work, painting, banners, awnings, direct mail, electric
spectaculars, kiosks, hoardings, bill boards, display of
products or by way of such other medium of advertisement;
(vi) being the expenditure by way of payment to any
advertising agency for the purposes of clauses (i) to (v)
above;
(vii) being the expenditure on distribution of samples
either free of cost or at concessional rate; and
(viii) being the expenditure by way of payment to any person
of repute for promoting the sale of goods or services of the
business of the employer,
shall not be considered as expenditure on sales promotion
including publicity;
(E) employees' welfare.
Explanation.-For the purposes of this clause, any
expenditure incurred or payment made to-
(i) fulfil any statutory obligation; or
(ii) mitigate occupational hazards; or
(iii) provide first aid facilities in the hospital or
dispensary run by the employer; or
(iv) provide creche facility for the children of the
employee; or
(v) sponsor a sportsman, being an employee; or
(vi) organise sports events for employees,
shall not be considered as expenditure for employees'
welfare;
(F) conveyance;
(G) use of hotel, boarding and lodging facilities;
(H) repair, running (including fuel), maintenance of motor
cars and the amount of depreciation thereon;
(I) repair, running (including fuel) and maintenance of
aircrafts and the amount of depreciation thereon;
(J) use of telephone (including mobile phone) other than
expenditure on leased telephone lines;
(K) [***]
(L) festival celebrations;
(M) use of health club and similar facilities;
(N) use of any other club facilities;
(O) gifts; and
(P) scholarships;
(Q) tour and travel (including foreign travel).
(3) For the purposes of sub-section (1), the privilege,
service, facility or amenity does not include perquisites in
respect of which tax is paid or payable by the employee or
any benefit or amenity in the nature of free or subsidised
transport or any such allowance provided by the employer to
his employees for journeys by the employees from their
residence to the place of work or such place of work to the
place of residence.
115WC. (1) For the purposes of this Chapter, the value of
fringe benefits shall be the aggregate of the following,
namely:-
(a) cost at which the benefits referred to in clause (b) of
sub-section (1) of section 115WB, is provided by the
employer to the general public as reduced by the amount, if
any, paid by, or recovered from, his employee or employees:
Provided that in a case where the expenses of the nature
referred to in clause (b) of sub-section (1) of section
115WB are included in any other clause of sub-section (2) of
the said section, the total expenses included under such
other clause shall be reduced by the amount of expenditure
referred to in the said clause (b) for computing the value
of fringe benefits;
(b) the amount of contribution, referred to in clause (c) of
sub-section (1) of section 115WB, which exceeds one lakh
rupees in respect of each employee;
(ba) the fair market value of the specified security or
sweat equity shares referred to in clause (d) of sub-section
(1) of section 115WB, on the date on which the option vests
with the employee as reduced by the amount actually paid by,
or recovered from, the employee in respect of such security
or shares.
Explanation.-For the purposes of this clause,-
(i) "fair market value" means the value determined in
accordance with the method as may be prescribed by the
Board;
(ii) "option" means a right but not an obligation granted to
an employee to apply for the specified security or sweat
equity shares at a predetermined price;
(c) twenty per cent of the expenses referred to in clauses
(A) to (L) of sub-section (2) of section 115WB;
(d) fifty per cent of the expenses referred to in clauses
(M) to (P) of sub-section (2) of section 115WB;
(e) five per cent of the expenses referred to in clause (Q)
of sub-section (2) of section 115WB.
(2) Notwithstanding anything contained in sub-section (1),-
(a) in the case of an employer engaged in the business of
hotel, the value of fringe benefits for the purposes
referred to in clause (B) of sub-section (2) of section
115WB shall be "five per cent" instead of "twenty per cent"
referred to in clause (c) of sub-section (1);
(aa) in the case of an employer engaged in the business of
carriage of passengers or goods by aircraft, the value of
fringe benefits for the purposes referred to in clause (B)
of sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(ab) in the case of an employer engaged in the business of
carriage of passengers or goods by ship, the value of fringe
benefits for the purposes referred to in clause (B) of
sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(b) in the case of an employer engaged in the business of
construction, the value of fringe benefits for the purposes
referred to in clause (F) of sub-section (2) of section
115WB shall be "five per cent" instead of "twenty per cent"
referred to in clause (c) of sub-section (1);
(c) in the case of an employer engaged in the business of
manufacture or production of pharmaceuticals, the value of
fringe benefits for the purposes referred to in clauses (F)
and (G) of sub-section (2) of section 115WB shall be "five
per cent" instead of "twenty per cent" referred to in clause
(c) of sub-section (1);
(d) in the case of an employer engaged in the business of
manufacture or production of computer software, the value of
fringe benefits for the purposes referred to in clauses (F)
and (G) of sub-section (2) of section 115WB shall be "five
per cent" instead of "twenty per cent" referred to in clause
(c) of sub-section (1);
(da) in the case of an employer engaged in the business of
carriage of passengers or goods by aircraft, the value of
fringe benefits for the purposes referred to in clause (G)
of sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(db) in the case of an employer engaged in the business of
carriage of passengers or goods by ship, the value of fringe
benefits for the purposes referred to in clause (G) of
sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(e) in the case of an employer engaged in the business of
carriage of passengers or goods by motor car, the value of
fringe benefits for the purposes referred to in clause (H)
of sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(f) in the case of an employer engaged in the business of
carriage of passengers or goods by aircraft, the value of
fringe benefits for the purposes referred to in clause (I)
of sub-section (2) of section 115WB shall be taken as Nil.