ICAI finalises Guidance Note on fringe tax

ICAI finalises Guidance Note on fringe tax

31st May, 2005

ICAI finalises Guidance Note on fringe tax

Corporates would soon have guidance on how they should account and disclose the amounts paid towards fringe benefit tax (FBT).

The Institute of Chartered Accountants of India (ICAI) has finalised a Guidance Note that requires corporates to disclose FBT as a separate line item in their financial statements.

This would also imply that FBT would have to be disclosed separately in both the quarterly as well as annual earnings disclosures of corporates.

"The FBT has to be shown as a line item that is separate from the current tax liability of the company. FBT is not a tax on income of the company and therefore cannot form part of the current tax liability," said Mr Ved Jain, Chairman, Fiscal Laws Committee of the ICAI.

He also said that FBT couldn't be considered as part of employee cost as it was an additional tax and the liability to pay this tax was on the employer and not on the employee.