Question

Fringe benefit tax is a tax

• A. paid by an employer in respect of the fringe benefits provided or deemed to have been provided by an employer to his employee
• B. paid by an employer for the benefits which he enjoys
• C. paid by a person for the benefits which he gets from his employer
• D. paid by a member of scheduled castes and scheduled tribes for benefits they receive from the government

Hint:

FBT = employer’s tax on non-cash perks to employees; abolished in India after 2009.

Answer 1

The Correct Option is A

Fringe Benefit Tax (FBT) was a tax levied on the value of fringe benefits that employers provide to their employees.
Examples of such benefits include company cars, subsidised meals, entertainment expenses, employee travel, and accommodation.
The tax was paid by the employer, not the employee, and was calculated on the taxable value of these benefits.
Option (b) is incorrect because it suggests the employer is paying for benefits he himself enjoys, which is not the concept of FBT.
Option (c) is incorrect because the employee does not directly pay FBT—it is the employer’s responsibility.
Option (d) is unrelated to FBT and instead refers to welfare benefits for specific communities.
FBT was introduced in India in 2005 but abolished in 2009.