Income-tax Act, 1961 | Chapter XII-H | Historical provision
Section 115WM of Income-tax Act, 1961: Discontinuation of Fringe Benefit Tax
Section 115WM provides that Chapter XII-H, which governed fringe benefit tax (FBT), does not apply to assessments for Assessment Year 2010-11 or any later assessment year. This article explains the statutory wording, the dates, and the consequences for employers and employees.
Text of Section 115WM
Nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.
Legislative note: Section 115WM was inserted by section 49 of the Finance (No. 2) Act, 2009 (Act 33 of 2009), with effect from 1 April 2009. The provision specifies the assessment years from which Chapter XII-H ceases to apply.
Meaning of the legal terms
Chapter XII-H
Chapter XII-H of the Income-tax Act, 1961 contained the former statutory framework for income-tax on fringe benefits, including definitions, the charge of tax, valuation, returns, assessments and payment rules.
Fringe benefit tax
Under the former section 115W, fringe benefit tax referred to the tax chargeable under section 115WA on qualifying fringe benefits provided or deemed provided by an employer. Section 115WB described the relevant benefits, while section 115WC governed their valuation.
Assessment year
An assessment year under section 2(9) of the Income-tax Act, 1961 is the 12-month period beginning on 1 April. Assessment Year 2010-11 therefore began on 1 April 2010 and related generally to income and benefits of Financial Year 2009-10.
When was fringe benefit tax abolished in India?
Fringe benefit tax was introduced by the Finance Act, 2005 and generally applied from Assessment Year 2006-07. The Finance (No. 2) Act, 2009 inserted section 115WM, making Chapter XII-H inapplicable from Assessment Year 2010-11 onwards. Thus, Assessment Year 2009-10 was the last assessment year to which the FBT charging regime generally applied.
The discontinuation did not mean that all employment benefits became tax-free. Depending on the benefit and applicable law, employee perquisite taxation continued under the relevant provisions, including section 17(2) of the Income-tax Act, 1961 for periods governed by that Act.
Practical effect of Section 115WM
- Employers: No separate fringe benefit tax under Chapter XII-H arises for Assessment Year 2010-11 or subsequent assessment years.
- Employees: The abolition of employer-level FBT does not itself exempt taxable salary perquisites.
- Older tax matters: Records or disputes involving years when FBT applied require consideration of the historical legislation and relevant procedural and limitation rules.
- Modern tax compliance: Section 115WM is a historical transition provision, not a present-day advance-tax payment schedule.
The Income-tax Department's official 2025 bill section-mapping document describes section 115WM as redundant in the new legislative structure. The historical wording remains important for interpreting the earlier FBT regime.
CBDT Circular No. 2/2010: Advance FBT paid for AY 2010-11
CBDT Circular No. 2/2010, dated 29 January 2010, clarified the treatment of amounts mistakenly or provisionally paid as advance fringe benefit tax for Assessment Year 2010-11. Such amounts were to be treated as advance income-tax paid by the assessee for that assessment year. They could be adjusted against the assessee's advance income-tax obligation or claimed as a refund, as applicable.
This was a transitional clarification for Assessment Year 2010-11, not a general instruction to pay fringe benefit tax today.
Frequently asked questions
Is fringe benefit tax applicable after 2009?
No. Chapter XII-H does not apply from Assessment Year 2010-11 onward by virtue of section 115WM.
Was Section 115WM a repeal of all employment benefit taxation?
No. It ended the operation of the separate Chapter XII-H fringe benefit tax regime for the specified assessment years. Taxable employee perquisites are governed by other applicable provisions.
What was the last year of fringe benefit tax?
Assessment Year 2009-10 was generally the last assessment year for which Chapter XII-H applied.
Official legislation and references
Updated: 27 October 2026. This is an informational explanation of a historical provision; the law and assessment year relevant to a particular matter must be checked separately.