Direct Tax - Fringe Benefit Tax

Finance Act, 2005 has introduced a new tax in the form of Fringe Benefit Tax (FBT). FBT is a tax payable by the employer on benefits (provided/ deemed) that employees (past or present) receive as a consideration of their employment. FBT is leviable on every employer excluding individuals/ Hindu Undivided Family and certain institutions enjoying certain exemptions.

Certain expenses are directly covered within the ambit of FBT. In respect of expenditure such as entertainment expenditure, conferences, etc. certain percentages of these expenses have been deemed as fringe benefits, upon which FBT is leviable. FBT will be leviable at the rate of 30 per cent plus applicable surcharge of 2.5 per cent or 10 per cent and education cess of 2 per cent on the tax including surcharge.

The due dates for the payment of FBT in the case of a company or a person whose accounts are required to be audited under the Act, is the 31st of October following the end of the financial year. In any other case, the due date is the 31st of July following the end of the financial year.


The manner of payment of FBT is similar to that of advance tax, FBT being paid or payable in each quarter, on or before the 15th day of the month following such quarter, except for the quarter ending on 31 March, in case of which the FBT will be payable on or before 15 March of the relevant financial year.

Banking Cash Transaction Tax
Finance Act, 2005 has introduced a new concept of taxation; under which amount withdrawn in excess of specified sum from certain categories of accounts maintained with a bank is subject to Banking Cash Transaction Tax (BCTT). Rate of BCTT is 0.1 per cent of the amount withdrawn from bank. Banks would be liable to pay the BCTT and are authorized to recover the same from the respective person. Banks are required to file returns with respect to BCTT in the prescribed format.

Tax authorities (Income-tax authorities have been designated as tax authorities) may carry out a detailed examination with respect to the return filed by banks.

Surcharge
Surcharge is a temporary charge levied by the central government. It is typically levied to meet unplanned government expenditure or to fund some budgetary deficit. Over the past few years, surcharge has varied between 0 to 13 per cent.

Surcharge is normally computed as a percentage of the tax liability. All domestic companies are liable to pay surcharge of 10 per cent. Surcharge is also applicable on MAT and DDT. Individuals are liable to pay surcharge of 10 per cent where their taxable income exceeds INR 1,000,000 in a financial year. Changes to the surcharge are generally announced annually.

An additional cess of 2 per cent in the form of education cess has also been levied on tax including surcharge (i.e., the basic tax plus surcharge are both increased by the additional surcharge.) For instance, resident companies are liable to pay tax at 30 per cent plus 10 per cent surcharge and education cess of 2 per cent, which amounts to a total tax percentage of 33.66 per cent. Additional surcharge education cess has been levied to meet out the expenditure on education.


Tax Incentives
Indian tax laws provide various tax incentives, for e.g.:

• An undertaking established in Special Economic Zones and deriving profit and gains from the export of articles or things or computer software
• A 100 per cent Export Oriented Undertaking
• An enterprise carrying on the business of developing, operating and maintaining infrastructure facilities such as a road, highway project, telecommunications services, etc
• An industrial undertaking engaged in the generation and / or the distribution of electricity
• An undertaking established in backward areas/ states
• An enterprise engaged in business of building, owning and operating multiplex theatre
• An enterprise engaged in building approved housing projects
• An undertaking engaged in business of operating and maintaining hospital in rural areas

The tax holiday period varies in each case and is available on satisfying certain conditions as well as on complying with specified procedural formalities.
Note : Unless otherwise stated the rates indicated are the effective rates for the financial year 2005-06. The effective rates include the basic rate, increased by applicable surcharge, both increased by additional surcharge/ education cess of 2 percent

We provides following income tax consultants services for Resident Indians:

• Filing of Income return for individuals, firms, companies, trust or HUF.
• To obtain Permanent Account Number (PAN)
• Specified advice on taxation
• Tax Audit
• Rectification, Revision or appeal of income tax orders
• To get the Income tax refund
• To get the clearance certificate for going abroad
• Tax Planning through investments
• Payments on which income tax deduction at source (TDS) required
• Consultancy on TDS matters
• Registration of trust for charitable purpose
• Advance tax computation
• Consultancy on Fringe Benefit Tax

MRC provides following income tax consultants services for Non-Resident Indians ( NRI)
The Non Resident Indians (NRIs) need information and guidance in relation to legalities and procedures as to the assets held in India and taxation of income and profit/gains on sale of assets. This is specifically related to following :

• Regulations as to operating bank accounts, repatriation of Income earned in India and special RBI schemes for returning NRI's.
• Regulation as to investments in shares and debentures, mutual funds, government securities and bank deposits and its taxation.
• Procedure for purchase and sale of immovable properties in India and renting them out.
• Procedure to file the Return of income and obtain tax exemption certificate and Permanent Account Number.
• Replies to any queries on Indian Taxation, Foreign Exchange Management Act (FEMA) and Reserve Bank of India procedures and approvals.
• Obtaining permission for repatriation of assets / income and assistance in compliance of repatriation procedures.