Section 115WG: Fringe Benefits Escaping Assessment
Section 115WG provided a mechanism for the Assessing Officer to assess or reassess fringe benefits that had escaped assessment under the former fringe benefit tax (FBT) regime. It operated together with the notice requirements of Section 115WH.
Under Section 115WM, Chapter XII-H does not apply to assessments for assessment year 2010-11 and subsequent years. Section 115WG is therefore a historical FBT provision, not a present-day authority to levy fringe benefit tax for those years. Any legacy proceedings must be considered in light of the law and applicable limitation rules governing the relevant period.
What is fringe benefit tax escaping assessment?
In the historical FBT system, fringe benefits were employment-related benefits and specified employer expenditures defined in Section 115WB. Their taxable value was determined under Section 115WC. Fringe benefits were said to have escaped assessment where a chargeable value was not assessed or was assessed at less than the amount chargeable under the applicable law.
The expression Assessing Officer refers to the income-tax authority empowered to make an assessment. The statutory phrase reason to believe required a legally supportable basis for initiating reassessment; the existence and adequacy of that basis, and compliance with statutory procedure, could be examined in an appropriate challenge.
Section 115WG: statutory rule explained
The operative text of Section 115WG provided that if the Assessing Officer had reason to believe that fringe benefits chargeable to tax had escaped assessment for an assessment year, the officer could, subject to Sections 115WH, 150 and 153, assess or reassess those fringe benefits. The officer could also bring into the reassessment other chargeable fringe benefits that came to notice subsequently during the same proceedings for the relevant assessment year.
This authority was not unrestricted. Section 115WH dealt specifically with notice for escaped fringe benefits, while Sections 150 and 153 formed part of the wider statutory framework affecting assessment and reassessment in their applicable versions.
Three deemed cases under the Explanation to Section 115WG
Where the assessee did not furnish a return of fringe benefits, the Explanation treated that as a case of fringe benefits escaping assessment. The original return obligation was contained in Section 115WD.
Where a fringe benefit return was furnished, no assessment had been made, and the Assessing Officer noticed that the value of fringe benefits had been understated in the return, the case was deemed to involve escaped assessment.
Where an assessment had already been made but fringe benefits chargeable to tax were under-assessed, the Explanation also treated the case as escaped assessment.
These three categories describe the historical deeming rule; they did not dispense with statutory requirements for a valid reassessment notice or other procedural safeguards.
Reassessment procedure and taxpayer safeguards
- Grounds for reopening: the Assessing Officer had to satisfy the statutory threshold of reason to believe that chargeable fringe benefits escaped assessment.
- Notice: reopening was expressly subject to Section 115WH, which governed issue of notice in escaped-assessment cases.
- Assessment of additional items: other escaped fringe benefits discovered in the course of valid proceedings could be considered for the same relevant assessment year.
- Time limits and transitional law: the applicable versions of Sections 115WH, 150 and 153 and any subsequent changes or saving provisions must be checked for the assessment year concerned. No general present-day reopening period should be inferred from this historical section alone.
- Evidence and response: employers facing a legacy dispute should examine the notice, reasons, return, valuation workings, prior orders and available records, and obtain case-specific advice.
Does Section 115WG apply today?
No new FBT charge arises for assessment year 2010-11 or later under Chapter XII-H. The Finance (No. 2) Act, 2009 discontinued the FBT regime for those assessment years through Section 115WM. Section 115WG remains relevant mainly when researching historical disputes or interpreting proceedings relating to years in which FBT applied.
Employee benefits may instead be addressed under the applicable provisions governing salary and perquisites, rather than the discontinued employer-level FBT mechanism. The Income-tax Act, 2025 commenced on 1 April 2026; the law applicable to a particular tax year or historical assessment must be determined using the relevant commencement, transition and saving provisions. The 2025 Act does not revive the former FBT regime.
Official legislation and further reading
- Income Tax Department - official portal (tax legislation and guidance).
- India Code - Government of India (central legislation, including the Income-tax Act, 1961 and amending Acts).
- Income Tax e-Filing portal (current income-tax services and resources).
- Related internal reading: Section 115WA - charge of FBT, Section 115WE - assessment and Section 115WF - best judgment assessment.
Editorial note: This page explains the historical provision and its present legal status. It is general information, not an opinion on the validity of a particular notice or assessment.