Finance Minister P Chidambaram has retained the controversial fringe benefit tax at 30 per cent.
He scrapped tax on cash withdrawals from savings accounts, but offered hardly any relief to employers.
The finance minister, however, has exempted companies from paying FBT on expenses incurred due to sales promotions.
No FBT is to be levied on medical expenses.
Companies that are loss making will be exempt from the FBT net. This will spell major relief to companies whoa re in financial distress.
Repairs and maintenance of cars have also been brought under the purview of fringe benefit tax now. The only saving grace is that only 5% of maintenance costs for transport companies will now be subject to FBT.
Fifty per cent of expenses on club facilities have been brought under FBT.
Similarly, expenses borne by companies on foreign travel of their employees will be under the purview of FBT. However, FBT on travel expenses has been cut to 5%.
Charitable institutions too have been exempted from FBT.
The finance minister has proposed to exclude expenditure on advertisement from FBT.
But any privilege, service or amenity provided directly or indirectly by an employer by way of reimbursement or otherwise to employees will attract FBT, which is to be paid by employers.
Similarly, any free or concessional ticket provided by the employer for private journeys of employees or their family members and any contribution to an approved superannuation fund for employees will come under the purview of FBT.
Entertainment, provision of hospitality of every kind by the employer to any person, whether by way of provision of food or beverages or in any other manner will attract FBT.
This includes any expenditure on or payment for food or beverages provided to employees in office or factories and any expenditure or payment through paid vouchers usable at eating joints or outlets and conference, other than fee for participation by employees.
Expenditure on employees welfare will attract FBT, but not the expenditure incurred or payment made to fulfil any statutory obligation or mitigate occupational hazard or provide first aid facilities in hospital or dispensary run by employers.
Other expenditures that will come under FBT are conveyance, tour and travel including foreign travel, use of hotel, boarding and lodging facilities, repair, running, maintenance of motor cars and aircraft and the amount depreciation on them.
Use of telephone including mobile phone will attract FBT but expenditure on leased telephone line will be exempt.
Maintenance of any accommodation like guest house except those used for training purposes, festival celebrations, use of health club and similar facilities, use of any other club facilities, gifts and scholarships will come under FBT.
Additional inputs: PTI
