Fringe Benefit Taxes and Fair Market Valuation of Unlisted Companies

Abstract

In the emerging global world, the operational aspects of business keep evolving to match the industry requirements. Taxation systems are undergoing changes rapidly to match the paradigm shifts. In India, the valuations for tax purposes are based on the relevant Finance Act and the rules of the tax department. Fringe Benefit Tax (FBT) is a tax levied on perquisites - or fringe benefits - provided by an employer to his employees, in addition to the cash salary or wages paid. Fringe Benefit Tax was introduced in India in the year 2005-2006.

This research paper deliberates on a live .com company to obtain the fair market valuation of an unlisted company (A-Z.com) to indicate the various valuation methodologies, the requirements, the calculations and analysis of these important aspects.

Keywords: FBT valuation, Unlisted companies, ESOPs, Fair market valuation

JEL Classification: M41, G32