Can Fringe Benefit Tax Be Included in CTC and Employment Letters? Seeking HR Insights

Dear HR Professionals,

This is really important and urgent. I hope to receive an early response from your end.

As you are aware of the Fringe Benefit Tax applicable to the reimbursements of employees, my query is: can the same be reflected in the appointment letters of the employees or their salary breakdowns as part of the CTC?

For instance, if an employee's salary is 3 lakh per annum (his CTC), and the total amount of his Fringe Benefit Tax (FBT) on his reimbursements amounts to Rs. 5000, can we reflect the same in his salary breakdown and appointment letter?

Any additional information on this topic is most welcome.

It would be great if you could mark your replies at: [Login to view]

Thank you and regards,

Kavita Yadav HR - Executive

Hi Kavita,

I have been pondering this topic for some time, and I believe a more knowledgeable person might provide insight on it, as I have not delved deeply into FBT. I don't think the same can be included in the CTC as far as the appointment letter is concerned; however, it is crucial to consider it when calculating the cost of the employee.

Another approach could be to increase the salary and reduce the fringe benefits. This way, employees would have more control over their taxes and could manage their investments, savings, and taxes accordingly. Paying 30% as FBT would often exceed the income tax in many cases, especially with investments in tax-saving bonds, insurance, home loans, etc.

This is the situation at our company: most of the fringe benefits have been eliminated, and salaries have been increased accordingly.

Ajmal Mirza
Email: mirza_ajmal@yahoo.com