In principle, Fringe Benefit Tax is a question rooted in the revenue philosophy of the Government. Whilst it was imposed in the year 2005, the Honorable Finance Minister has now brought ESOPs under the purview of the definition “Perquisites” under Section 17. This was clearly exempted last year. This is surprising, considering that on the one hand, organized industry is coping with the issue of talent retention as its main challenge, whereas on the other hand, ESOPs which is a very effective tool for talent retention, is now being made a costly solution.

ESOPs, anyways, are charged under Capital Gains Tax. Therefore, imposing FBT on the company sounds like a double whammy.