Currently, certain prescribed fringe benefits provided by an employer to his employees are liable to FBT in the hands of the employer. Such fringe benefits are not included within the scope of ‘perquisites’ as defined in section 17. As FBT will now be abolished, ‘perquisites’ will include the following:

1. Presently, FBT is levied on the employer in respect of any allotment or transfer (directly or indirectly) of any specified securities or sweat equity shares to its employee (including former employee). Now, such benefit will be subject to tax as a perquisite only in the hands of the employee as under:

The perquisite value taxable in the hands of the employee will be the difference between the FMV of the specified security or sweat equity shares on the date on which the option is exercised and the amount actually paid by/ recovered from the employee.
FMV will be computed in accordance with the method to be prescribed.
Presently, in case of shares/ debentures/ warrants acquired under an ESOP prior to enactment of FBT, the value considered for computing perquisite in the hands of the employee is considered as cost of acquisition on sale. Now, FMV considered for computing the perquisite value will be considered as cost of acquisition on sale of such specified security or sweat equity shares.
2.Presently, contribution by the employer to an approved superannuation fund for employees in excess of INR 100,000 for each employee is subject to FBT in hands of the employer. Now, such excess will be a taxable perquisite in the hands of the employee.

3.Value of any other fringe benefit or amenity as may be prescribed.

4.Presently, prescribed fringe benefits (other than those subject to FBT) are taxable as perquisites in the hands of the employee. Now, all prescribed fringe benefits would be subject to tax in the hands of employee.