The Hindu Business Line : MNC liaison offices likely to come under FBT, say tax experts

MNCs operating liaison offices or representative offices in the country are most likely to be covered under fringe benefit tax (FBT) even though they may operate on a "no income basis" and not be required to pay income tax, say tax experts.

"They will be required to pay FBT. FBT is a tax in respect of fringe benefits extended by the employer to the employees. The liability to pay fringe benefit is there notwithstanding no income tax payable by an employer," Mr Ved Jain, co-Chairman of Assocham Direct Taxes Committee, told Business Line.

Ms Neeru Ahuja, Senior Director of Deloitte, Haskins & Sells, told a tax conference organised by Assocham that there is no exclusion of liaison offices of foreign companies from the ambit of FBT provisions.

"MNCs operating liaison offices or representative offices would have to look into this and possibly pay FBT," she said.

Meanwhile, the Institute of Chartered Accountants of India (ICAI) is likely to approach the Finance Ministry for an extension in the deadline for payment of first instalment of advance FBT by a month.

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