Fringe Benefit Tax (FBT) is a tax levied on perquisites-or fringe benefits provided by an employer to his employees, in addition to the

cash salary or wages paid. Fringe Benefit Tax was introduced in India in the year 2005-2006. Fringe Benefit Tax is subject to varying treatment in different countries. These benefits are either taxed in the hands of the employees themselves or the value of such benefits is subject to a 'fringe benefit tax' in the hands of the employer. The rationale for levying a fringe benefit tax on the employer lies in the inherent difficulty in isolating the 'personal element' where there is collective enjoyment of such benefits and attributing the same directly to the employee. Moreover, in cases where the employer directly reimburses the employee for expenses incurred, it becomes difficult to effectively capture the true extent of the perquisite provided because of the problem of cash flow in the hands of the employer. Therefore, a two-pronged approach has been adopted for the taxation of fringe benefits under the Income-tax Act. Perquisites which can be directly attributed to the employees are taxed in their hands in accordance with the existing provisions of section 17(2) of the Income-tax Act and subject to the method of valuation outlined in rule 3 of the Income-tax Rules. In cases, where attribution of the personal benefit poses problems, or for some reasons, it is not feasible to tax the benefits in the hands of the employee, it is proposed to levy a separate tax known as the fringe benefit tax on the employer on the value of such benefits provided or deemed to have been provided to the employees. Fringe benefits shall be deemed to have been provided if the employer has incurred any expense or made any payment for the purposes of: (a) entertainment; (b) festival celebrations; (c) gifts; (d) use of club facilities; (e) provision of hospitality of every kind to any person whether by way of food and beverage or in any other manner, excluding food or beverages provided to the employees in the office or factory; (f) maintenance of guest house;

(g) conference; (h) employee welfare; (i) use of health club, sports and similar facilities; (j) sales promotion, including publicity; (k) conveyance, tour and travel, including foreign travel expenses; (l) hotel boarding and lodging; (m) repair, running and maintenance of motor cars; (n) repair, running and maintenance of aircraft; (o) consumption of fuel other than industrial fuel; (p) use of telephone; (q) scholarship to the children of the employees.

STT Securities Transaction Tax (STT) is a tax being levied on all transactions done on the stock exchanges.Securities Transaction Tax is applicable on purchase or sale of equity shares, derivatives, equity oriented funds and equity oriented Mutual Funds. Current STT on purchase or sell of an equity share is 0.075%. When you have paid security transaction tax at the time of selling securities (shares), then, If you are an investor and not trader: 1. If you are selling the shares after 12 months, then it comes under long term capital gains and you need not have to pay any tax on that gain. 2. If you are selling the shares before 12 months then you have to pay short term capital gains @10% flat on the gain. If you are a trader and not an investor:

All your gains will be treated as trading (Business) and you have to pay tax as per tax sables. In this case the transaction tax paid by you can be claimed back/adjusted in tax to be paid. STT is applicable at different rates depending upon the security (whether equity or derivative) and the transaction (whether purchase or sell). Current STT rates are given below. Note that Service Tax, Surcharge and Education Cess are not applicable on STT. STT applicable for Equity Transactions Delivery Transactions Purchase: 0.125% of Turnover i.e. (Number of Shares * Price) Sell: 0.125% of Turnover i.e. (Number of Shares * Price) Intra-day Transactions Purchase: NIL Sell: 0.025% of Turnover i.e. (Number of Shares * Price) STT applicable for Derivative Transactions Future Transactions Purchase: NIL Sell: 0.017% of Turnover i.e. (Number of Lots * Lot Size * Price) Option Transactions Purchase: NIL at the time of purchase of option. However the purchaser has to pay 0.125% of the Settlement Price i.e. (Number of Lots * Lot Size * Strike Price), in case of option exercise Sell: 0.017% of Premium Summary of the STT rates is given in the table below:

Product EquityDelivery

Transaction Purchase Sell

STT rate 0.125% 0.125%

Charged on Turnover Turnover

EquityIntraday Future

Purchase Sell Purchase Sell Purchase Sell

0.025% 0.017% 0.125% 0.017%

Option

Turnover Turnover Settlement price, on exercise Premium

Now that you have understood how STT is calculated, click here to understand more about charges other than brokerage and STT levied on stock exchange transactions. Income Tax and STT Taxation of profit or loss from securities transactions depends on whether the activity of purchasing and selling of shares / derivatives is classified as investment activity or business activity. Treatment of STT also depends upon whether the income from these securities transactions are included under the head Income from Capital Gains or under the head Profits and Gains of Business or Profession.

BCTT Banking Cash Transaction Tax, would be applicable for withdrawal of Rs 25,000 and above on a single day from current and other non-savings accounts in the banks for individuals and Hindu Undivided Families from the 1st June 2005. The savings accounts have been totally exempted from the 0.1 per cent tax on cash withdrawal. For business accounts, the 0.1 per cent tax would be applicable for any withdrawal beyond Rs one lakh on a single day. The Central Board of Direct Taxes (CBDT) has clarified that multi transactions of cash withdrawals from an account or receipt of cash on encashment of term deposits or deposits in the name of the same person on any single day will be treated as one transaction. A three stage reporting system will be in place for the 300 odd scheduled banks collecting the tax. Firstly, each bank branch will have to maintain a transaction wise record -- which will include, among other things, the account number, name and address of the person and the value of the banking cash transaction tax. Bank branches will not have to report these details to the IT department unless called for. In the second stage, scheduled banks will have to furnish a monthly return form listing out just the number of taxable banking transactions entered into by each branch and the amount collected in a month. The first report such will be given by banks on July 31, this year on a computer medium. In the third stage, banks will furnish an annual return (or a summary) of all the taxable banking transactions. The first such report will be given on July 31, 2005.

MAT ection 115J which was a special provision applicable to a company if its total income as computed under the Income tax was less than thirty per cent of its book profit was introduced with effect from 1.4.1988 but was discontinued with effect from 1.4.1991. It was revived as Section 115J with effect from 1.4.1997 as a

provision deeming total income equal to thirty per cent of book profit of companies referred to earlier. This provision was also discontinued with effect from 1.4.2001 but was substituted by Section 115JB effective from the same date. This provision follows concept of minimum alternate tax. As provided cut in the Explanatory Memorandum to the Finance Bill, 2000, the Minimum Alternate Tax had been levied from the assessment year 1997-98 as the number of zero tax companies and companies paying marginal tax had proliferated. The efficacy of that provision, however, had declined in view of the exclusion of various sectors from the operation of MAT and the text credit systems. Hence, in its place the new provision of Section 155JB were inserted which are simpler in application. They provide that all companies having book profits under the Companies Act shall have to pay a minimum alternate tax at a rate of 15%. These provisions are applicable to all corporate entities. However, the profits received in convertible foreign exchange and eligible for deduction under Section AA have to exclude while working out book profits. According to this section, if the income tax payable by a company on its total income as computed under the income Tax Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2007, is less than 15% of such book profit plus surcharge if applicable, the tax payable for the relevant previous year shall be deemed to be 15% of such book profit plus surcharge as may be applicable from time to time. This non-absolute provision will override any other provision of the Income Tax Act. Sub-section (2) of this section requires the company in this case will prepare its profit and loss account for the relevant previous year in accordance with the provisions of part II and III o0f Schedule VI of the companies Act, 1956. However, while preparing the annual accounts including profit and loss account The accounting policies; The accounting standards followed for preparing such accounts including profit and loss accounts; and The methods and rates adopted for calculating then depreciation, Shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provision of Section 210 of the companies Act, 1956. But where the company has adopted or adopts the financial year, which is different from the previous year under the Income Tax Act, (a), (b) and (c)

aforesaid shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account for the financial year or a part of such financial year falling within the relevant previous year.