Section 115WC - Value of Fringe Benefits
Section 115WC prescribed how an employer calculated the taxable value of fringe benefits under the former fringe benefit tax (FBT) regime in Chapter XII-H of the Income-tax Act, 1961.
What did Section 115WC provide?
Section 115WC governed the value of fringe benefits, rather than the tax rate. The charge of FBT was provided by Section 115WA, while the types of benefits and expenses were described in Section 115WB. Section 115WC then determined the amount on which the historical tax was calculated.
Historical valuation rules under Section 115WC(1)
- Free or concessional private-journey tickets: the employer's cost of providing equivalent tickets to the public, less any employee recovery, subject to the rule against double counting.
- Approved superannuation fund: the employer's contribution exceeding Rs. 1,00,000 per employee under the version reproduced below.
- Specified securities and sweat equity: fair market value on the date of vesting, reduced by the amount paid or recovered from the employee. The fair market value was determined under prescribed rules.
- Specified expense categories (A) to (L) of Section 115WB(2): generally 20% of expenditure.
- Categories (M) to (P): generally 50% of expenditure.
- Tour and travel under category (Q): generally 5% of expenditure.
These percentages represent historical valuation proportions, not separate tax rates. Their applicability depends on the statutory version for the relevant year.
Special valuation rules under Section 115WC(2)
Some industries were subject to a lower deemed valuation or a nil valuation for specified expenses. The historical provisions included:
- Hotels, airlines and shipping businesses: 5% valuation for specified hospitality expenditure.
- Construction businesses: 5% for specified conveyance expenditure.
- Pharmaceutical and computer software businesses: 5% for specified conveyance and hotel, boarding or lodging expenditure.
- Airlines and shipping businesses: 5% for specified hotel, boarding and lodging expenditure.
- Motor transport businesses: 5% for specified motor-car expenditure.
- Airlines: nil valuation for the specified aircraft-related expenditure.
These exceptions were tied to particular clauses of Section 115WB(2), and should be read together with the detailed historical wording below.
Does Section 115WC apply today?
No current-year fringe benefit tax is calculated under Section 115WC. Section 115WM ended the operation of Chapter XII-H for assessment years beginning on or after 1 April 2010. Historical disputes or records may still require reference to the law as it applied to the relevant assessment year.
Employee benefits may instead be taxable as salary perquisites under the applicable income-tax legislation and rules, depending on the year, nature of the benefit and applicable exemptions. The historical percentages under Section 115WC should not be used to value present-day employee perquisites.
Section 115WC - Historical statutory text and amendment notes
The following text is retained from the original webpage for historical reference. Numbered amendment notes and historical rates are not statements of current law.
(1) For the purposes of this Chapter, the value of fringe benefits shall be the
aggregate of the following, namely:-
(a) cost at which the benefits referred to in clause (b) of sub-section (1) of
section 115WB, is provided by the employer to the general public as reduced by
the amount, if any, paid by, or recovered from, his employee or employees:
Provided that in a case where the expenses of the nature referred to in clause
(b) of sub-section (1) of section 115WB are included in any other clause of
sub-section (2) of the said section, the total expenses included under such
other clause shall be reduced by the amount of expenditure referred to in the
said clause (b) for computing the value of fringe benefits;
1 (b) the amount of contribution, referred to in clause (c) of sub-section (1)
of section 115WB, which exceeds one lakh rupees in respect of each employee;
2 (ba) the fair market value of the specified security or sweat equity shares
referred to in clause (d) of sub-section (1) of section 115WB, on the date on
which the option vests with the employee as reduced by the amount actually paid
by, or recovered from, the employee in respect of such security or shares.
Explanation.-For the purposes of this clause,-
(i) "fair market value" means the value determined in accordance with the method
as may be prescribed by the Board;
(ii) "option" means a right but not an obligation granted to an employee to
apply for the specified security or sweat equity shares at a predetermined
price;
(c) twenty per cent of the expenses referred to in 3 clauses (A) to (L) of
sub-section (2) of section 115WB;
(d) fifty per cent of the expenses referred to in 4 clauses (M) to (P) of
sub-section (2) of section 115WB;
5 (e) five per cent. of the expenses referred to in clause (Q) of sub-section
(2) of section 115WB.
(2) Notwithstanding anything contained in sub-section (1),-
(a) in the case of an employer engaged in the business of hotel, the value of
fringe benefits for the purposes referred to in clause (B) of sub-section (2) of
section 115WB shall be "five per cent." instead of "twenty per cent." referred
to in clause (c) of sub-section (1);
5 (aa) in the case of an employer engaged in the business of carriage of
passengers or goods by aircraft, the value of fringe benefits for the purposes
referred to in clause (B) of sub-section (2) of section 115WB shall be "five per
cent" instead of "twenty per cent" referred to in clause (c) of sub-section (1);
(ab) in the case of an employer engaged in the business of carriage of
passengers or goods by ship, the value of fringe benefits for the purposes
referred to in clause (B) of sub-section (2) of section 115WB shall be "five per
cent" instead of "twenty per cent." referred to in clause (c) of sub-section
(1);
(b) in the case of an employer engaged in the business of construction, the
value of fringe benefits for the purposes referred to in clause (F) of
sub-section (2) of section 115WB shall be "five per cent" instead of "twenty per
cent" referred to in clause (c) of sub-section (1);
(c) in the case of an employer engaged in the business of manufacture or
production of pharmaceuticals, the value of fringe benefits for the purposes
referred to in clauses (F) and (G) of sub-section (2) of section 115WB shall be
"five per cent" instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
(d) in the case of an employer engaged in the business of manufacture or
production of computer software, the value of fringe benefits for the purposes
referred to in clauses (F) and (G) of sub-section (2) of section 115WB shall be
"five per cent" instead of "twenty per cent" referred to in clause (c) of
sub-section (1);
6 (da) in the case of an employer engaged in the business of carriage of
passengers or goods by aircraft, the value of fringe benefits for the purposes
referred to in clause (G) of sub-section (2) of section 115WB shall be "five per
cent" instead of "twenty per cent" referred to in clause (c) of sub-section (1);
(db) in the case of an employer engaged in the business of carriage of
passengers or goods by ship, the value of fringe benefits for the purposes
referred to in clause (G) of sub-section (2) of section 115WB shall be "five per
cent" instead of "twenty per cent" referred to in clause (c) of sub-section (1);
(e) in the case of an employer engaged in the business of carriage of passengers
or goods by motor car, the value of fringe benefits for the purposes referred to
in clause (H) of sub-section (2) of section 115WB shall be "five per cent"
instead of "twenty per cent" referred to in clause (c) of sub-section (1);
(f) in the case of an employer engaged in the business of carriage of passengers
or goods by aircraft, the value of fringe benefits for the purposes referred to
in clause (1) of sub-section (2) of section 115WB shall be taken as Nil.
Legislative amendment notes
1. Subs. by s. 29, ibid., for clause (b) (w.e.f. 1-4-2007).
2. Ins. by Act 22 of 2007, s. 39 (w.e.f. 1-4-2008).
3. Subs. by Act 18 of 2008, s. 26, for "clauses (A) to (K)" (w.e.f. 1-4-2009).
4. Subs. by s. 26, ibid., for "clauses (L) to (P)" (w.e.f. 1-4-2009).
5. Ins. by Act 21 of 2006, s. 29 (w.e.f. 1-4-2007).
6. Ins. by Act 21 of 2006, s. 29 (w.e.f. 1-4-2007).
Official legal resources
For the applicable text and subsequent legislative changes, consult the Income Tax Department, the India Code legislative database and the Gazette of India. Check the assessment-year-specific version before relying on historical provisions.
Last reviewed: 27 October 2026. This article provides general legal information, not case-specific tax advice.