Section 115W - Definitions of Employer and Fringe Benefit Tax
An explanation of the former fringe benefit tax definitions, statutory scope, abolition and continuing relevance to historical tax matters.
Section 115W of the Income-tax Act, 1961 defined two key expressions for Chapter XII-H: employer and fringe benefit tax. The chapter established the former fringe benefit tax (FBT) regime, which applied to specified benefits provided or deemed provided by employers to employees.
Section 115W: Definitions
The following is the substantive historical provision as reproduced in the original page, with footnote markers separated for readability:
In this Chapter, unless the context otherwise requires, -
(a) "employer" means, -
- a company;
- a firm;
- an association of persons or a body of individuals, whether incorporated or not;
- a local authority; and
- every artificial juridical person, not falling within any of the preceding sub-clauses:
Provided that any person eligible for exemption under clause (23C) of section 10 or registered under section 12AA or a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) shall not be deemed to be an employer for the purposes of this Chapter;
(b) "fringe benefit tax" or "tax" means the tax chargeable under section 115WA.
Meaning and scope of the definitions
Employer under Section 115W(a)
For the former FBT regime, the definition covered companies, firms, associations of persons, bodies of individuals, local authorities and other artificial juridical persons. The proviso excluded certain entities eligible for exemption under Section 10(23C), entities registered under Section 12AA and political parties registered under Section 29A of the Representation of the People Act, 1951. These exclusions must be interpreted by reference to the statutory language applicable to the relevant historical year.
Fringe benefit tax under Section 115W(b)
The expression referred to the additional income-tax chargeable under Section 115WA. The nature of fringe benefits was addressed in Section 115WB, while their valuation was addressed in Section 115WC.
When was fringe benefit tax abolished?
Section 115WM provides that nothing contained in Chapter XII-H applies in relation to assessment years commencing on or after 1 April 2010. Consequently, the FBT regime ceased to apply from assessment year 2010-11. Historic obligations or disputes for earlier years must be examined under the law applicable to those years.
How are employee benefits taxed now?
The abolition of employer-level FBT did not make all employment benefits tax-free. Taxable salary perquisites and benefits are considered under the applicable salary-tax provisions, including Section 17(2) of the Income-tax Act, 1961 and the relevant valuation rules, subject to the law applicable for the tax year concerned. The Income-tax Act, 2025 has a separate framework applicable from 1 April 2026; it should not be confused with the discontinued FBT chapter of the 1961 Act.
Legislative history
Chapter XII-H and Section 115W were inserted by the Finance Act, 2005 (Act 18 of 2005), with effect from 1 April 2006. The definition in clause (a)(iii) was substituted and the proviso was inserted by the Taxation Laws (Amendment) Act, 2005 (Act 55 of 2005), with effect from 1 April 2006. Section 115WM subsequently ended the chapter's application for assessment year 2010-11 onwards.
Official legal references
- Income Tax Department: Income-tax Act, 1961
- India Code: Central legislation and amendment Acts
- Income Tax Department: e-Filing portal
Frequently asked questions
Is fringe benefit tax payable in India today?
No. Section 115WM made Chapter XII-H inapplicable from assessment year 2010-11 onwards.
Who was an employer under Section 115W?
The definition covered specified companies, firms, associations, local authorities and artificial juridical persons, subject to the exclusions in the proviso.
Does abolition of FBT exempt employee perquisites?
No. Taxable employee perquisites may still be taxed under the applicable salary and perquisite provisions.