It would, thus, be better that the valuation of such securities should be aligned with the method prescribed for securities listed on Indian stock exchanges by notifying some recognised overseas stock exchanges.

In the cases of expatriate employees being granted ESOPs, whether the payment of FBT by employers and its recovery from such expatriates can be claimed as tax credit by expatriates in their home country?

The CBDT in Circular no 9 dated December 20, 2007, has clarified that such recovered FBT cost can be claimed as tax credit in other tax jurisdiction by the employees. However, the mode and procedure has not been prescribed. Therefore, in order to help the employee claim such credit, a prescribed form should be notified that may be issued either by the employer or by the tax office certifying that the employee has borne the tax on ESOPs.

How do you see the applicability of FBT on employers not required to maintain books of accounts under the I.T. Act?

Having regard to the complexity of computation of income in certain case of assessees, they have been exempted from maintaining books of accounts. They are paying taxes on presumptive income basis. Applicability of FBT on such assessees (as employers) would defeat the very purpose. However, recently, Authority for Advance Ruling, in the case of an oil exploration company (covered under presumptive tax regime), has held that it is liable to pay FBT on transportation cost incurred in India on its expatriate employees. This issue needs to be addressed by the Government by bringing appropriate amendment so that employer under presumptive tax regime should not face undue hardship.

FBT is levied on specified expenses incurred by the employer. Whether Government is bringing any amendment or in the process of issuing any clarifications to remove discrimination in treatment of similar expenses though covered under different FBT heads?

It is correct that there are certain heads of expenses, which lead to different treatment of similar expenses. For example, expenses on ‘hotel, boarding & lodging’ are typically on account of ‘tour & travel’ however, the rate of deemed benefit on ‘hotel, boarding & lodging’ is higher compared with ‘tour & travel’, which results in discrimination. The Government should re-grouped the head of expenses to avoid such discrimination.

How FBT is affecting employees vis-À-vis rising cost of medical facilities and retirement benefits?

The levy of FBT on medical reimbursements and superannuation, being supplemental schemes in a weak social security system in the country may be re-considered in the larger interest of society.

Whether distribution of free or subsidised own products by the employer to its employees would attract FBT?

There is no FBT on distribution of free or subsidised ‘samples’ as this amount to advertisement. Levy of FBT on distribution of its own product by the employer to its employees by treating it as employee welfare and not advertisement seems unfair. It is suggested to treat all distributions of products or samples whether to employees or to others uniformly.

Whether FBT is applicable on companies enjoying tax holidays or having huge tax losses? If yes, whether FBT liability could be set off against TDS or other credits claimed as refund by such companies?

FBT is applicable on all companies, whether they are enjoying tax holidays or having huge tax losses. Under FBT, there are no provisions to setoff TDS or other payment of taxes with the FBT liability. Therefore, this hardship of paying FBT by such companies despite being exempted from tax or having huge tax losses should be considered and allowed to be setoff against TDS credits.