Section 115WB and 115WC of Income Tax Act 1961: Fringe Benefits and Value of Fringe Benefits

Meaning of Fringe Benefits under Section 115WB

Section 115WB of the Income Tax Act, 1961 defines fringe benefits for the purposes of fringe benefit tax provisions. Fringe benefits include consideration for employment provided by an employer to employees by way of privilege, service, facility or amenity.

Such benefits may include free or concessional tickets for private journeys, employer contribution to approved superannuation funds and specified securities or sweat equity shares allotted or transferred to employees at concessional rates.

Expenses treated as Fringe Benefits

Under Section 115WB(2), certain business expenses are deemed to provide fringe benefits, including entertainment, hospitality, conference expenses, sales promotion, employee welfare, conveyance, hotel and lodging facilities, motor car expenses, telephone facilities, festival celebrations, club facilities, gifts, scholarships and tour and travel expenses.

The section also provides exclusions and explanations for certain expenses which are not treated as fringe benefits.

Value of Fringe Benefits under Section 115WC

Section 115WC provides the method for calculating the value of fringe benefits. The value is determined by aggregating specified amounts including the cost of benefits provided to employees, eligible contributions, fair market value of specified securities or sweat equity shares and prescribed percentages of specified expenses.

Provision	Subject
Section 115WB	Definition and scope of fringe benefits
Section 115WC	Method for valuation of fringe benefits