Section 115WKA addresses the ESOP/sweat-equity limb. Where specified security or sweat equity shares under s.115WB(1)(d) are allotted or transferred on or after 1 April 2007, the employer — notwithstanding anything in the governing agreement or scheme — may lawfully vary that agreement or scheme so as to recover from the employee the FBT attributable to the value determined under s.115WC(1)(ba). It is an enabling, overriding provision legitimising the pass-through of the ESOP FBT burden to the employee, working in tandem with s.115WKB.
Historical context / FA amendment trail
Inserted by the Finance Act, 2007 (ESOP FBT package) for specified security/sweat equity allotted or transferred on or after 1 April 2007. Inapplicable from AY 2010-11 (s.115WM); on abolition the ESOP perquisite reverted to s.17(2) in the employee's hands.
Operative consequences
• Permits the employer to contractually recover the ESOP FBT from the employee, overriding the scheme/agreement.
• Confined to specified security/sweat equity allotted or transferred on or after 1 April 2007.
• Operates with s.115WKB (deemed payment by employee; no refund/credit).
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Block 1 reproduces the statutory text verbatim from the Income-tax Act, 1961 (text as printed; the Chapter remains on the statute book but is inapplicable from AY 2010-11 by s.115WM). The Finance Act, 2026 makes no substantive change to Chapter XII-H. Not legal advice.
Case Laws & Commentary
Section 115WKA — Recovery of Fringe Benefit Tax by the Employer from the Employee
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Chapter: XII-H — Income-tax on Fringe Benefits (Fringe Benefit Tax). Inserted by the Finance Act, 2005 with effect from assessment year 2006-07.
Operative life: FBT was levied for assessment years 2006-07 to 2009-10. By section 115WM (inserted by the Finance (No. 2) Act, 2009), the Chapter does not apply from assessment year 2010-11 onwards. The sections were NOT omitted — they remain on the statute book but are switched off prospectively.
Finance Act, 2026: Makes no substantive amendment to Chapter XII-H. (The Finance Act, 2026 carries only consequential cross-references to sections 115WD/115WH in a penalty provision; the FBT charge, scope and machinery are untouched.)
Part: C — Procedure for filing of return, assessment and payment.
Inserted: By the Finance Act, 2007 (ESOP-related), operative for specified security/sweat equity allotted or transferred on or after 1 April 2007.
A. SECTION COMMENTARY
Section 115WKA addresses the ESOP/sweat-equity limb of FBT. When specified security or sweat equity shares under 115WB(1)(d) are allotted or transferred on or after 1 April 2007, the employer — notwithstanding anything in the governing agreement or scheme — may lawfully vary that agreement or scheme so as to recover from the employee the FBT attributable to the value of the fringe benefit determined under 115WC(1)(ba). It is an enabling/overriding provision that legitimises the employer passing the FBT burden on the ESOP perquisite to the employee.
The section works in tandem with section 115WKB, which prescribes the tax consequences once such recovery is made (the recovered FBT is deemed to be tax paid by the employee, but the employee cannot claim a refund or credit of it). There is no reported decision on section 115WKA; it is an enabling provision whose operation is essentially contractual-overriding. The no-double-recovery principle in Hindustan Coca-Cola is the nearest cognate authority for the policy underlying the WKA-WKB mechanism.
B. STATUTORY POSITION (verbatim text)
Section 115WKA, Income-tax Act, 1961:
115WKA. Notwithstanding anything contained in any agreement or scheme under which any specified security or sweat equity shares referred to in clause (d) of sub-section (1) of section 115WB has been allotted or transferred, directly or indirectly, by the employer on or after the 1st day of April, 2007, it shall be lawful for the employer to vary the agreement or scheme under which such specified security or sweat equity shares has been allotted or transferred so as to recover from the employee the fringe benefit tax to the extent to which such employer is liable to pay the fringe benefit tax in relation to the value of fringe benefits provided to the employee and determined under clause (ba) of sub-section (1) of section 115WC.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WKA. It is an enabling/overriding provision permitting the employer to recover ESOP-related FBT from the employee; it operates with section 115WKB. The no-double-recovery policy is reflected in the cognate authority below.
Proposition: Tax cannot be recovered twice in respect of the same liability; once the recipient has paid the tax on an amount, the same amount cannot again be recovered from the payer though interest/consequences may follow for the default period.
Why relevant: Embodies the no-double-recovery principle that underlies section 115WB(3) (perquisite already taxed in the employee's hands is excluded) and sections 115WKA-115WKB (mechanism to avoid the employee being taxed again where the employer recovers the FBT).
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced verbatim from the Income-tax Act, 1961 (text as printed in the Act, the Chapter remaining on the statute book but rendered inapplicable from assessment year 2010-11 onwards by section 115WM). Citations are stated as reported; rulings of the Authority for Advance Rulings and orders of the Tribunal are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority (including the machinery provisions imported by section 115WL) is given. This material is for professional reference and is not legal advice.
Function in the statutory architecture
Section 115WKA addresses the ESOP/sweat-equity limb. Where specified security or sweat equity shares under s.115WB(1)(d) are allotted or transferred on or after 1 April 2007, the employer — notwithstanding anything in the governing agreement or scheme — may lawfully vary that agreement or scheme so as to recover from the employee the FBT attributable to the value determined under s.115WC(1)(ba). It is an enabling, overriding provision legitimising the pass-through of the ESOP FBT burden to the employee, working in tandem with s.115WKB.
Historical context / FA amendment trail
Inserted by the Finance Act, 2007 (ESOP FBT package) for specified security/sweat equity allotted or transferred on or after 1 April 2007. Inapplicable from AY 2010-11 (s.115WM); on abolition the ESOP perquisite reverted to s.17(2) in the employee's hands.
Operative consequences
• Permits the employer to contractually recover the ESOP FBT from the employee, overriding the scheme/agreement.
• Confined to specified security/sweat equity allotted or transferred on or after 1 April 2007.
• Operates with s.115WKB (deemed payment by employee; no refund/credit).
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Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Block 1 reproduces the statutory text verbatim from the Income-tax Act, 1961 (text as printed; the Chapter remains on the statute book but is inapplicable from AY 2010-11 by s.115WM). The Finance Act, 2026 makes no substantive change to Chapter XII-H. Not legal advice.
Case Laws & Commentary
Section 115WKA — Recovery of Fringe Benefit Tax by the Employer from the Employee
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Chapter: XII-H — Income-tax on Fringe Benefits (Fringe Benefit Tax). Inserted by the Finance Act, 2005 with effect from assessment year 2006-07.
Operative life: FBT was levied for assessment years 2006-07 to 2009-10. By section 115WM (inserted by the Finance (No. 2) Act, 2009), the Chapter does not apply from assessment year 2010-11 onwards. The sections were NOT omitted — they remain on the statute book but are switched off prospectively.
Finance Act, 2026: Makes no substantive amendment to Chapter XII-H. (The Finance Act, 2026 carries only consequential cross-references to sections 115WD/115WH in a penalty provision; the FBT charge, scope and machinery are untouched.)
Part: C — Procedure for filing of return, assessment and payment.
Inserted: By the Finance Act, 2007 (ESOP-related), operative for specified security/sweat equity allotted or transferred on or after 1 April 2007.
A. SECTION COMMENTARY
Section 115WKA addresses the ESOP/sweat-equity limb of FBT. When specified security or sweat equity shares under 115WB(1)(d) are allotted or transferred on or after 1 April 2007, the employer — notwithstanding anything in the governing agreement or scheme — may lawfully vary that agreement or scheme so as to recover from the employee the FBT attributable to the value of the fringe benefit determined under 115WC(1)(ba). It is an enabling/overriding provision that legitimises the employer passing the FBT burden on the ESOP perquisite to the employee.
The section works in tandem with section 115WKB, which prescribes the tax consequences once such recovery is made (the recovered FBT is deemed to be tax paid by the employee, but the employee cannot claim a refund or credit of it). There is no reported decision on section 115WKA; it is an enabling provision whose operation is essentially contractual-overriding. The no-double-recovery principle in Hindustan Coca-Cola is the nearest cognate authority for the policy underlying the WKA-WKB mechanism.
B. STATUTORY POSITION (verbatim text)
Section 115WKA, Income-tax Act, 1961:
115WKA. Notwithstanding anything contained in any agreement or scheme under which any specified security or sweat equity shares referred to in clause (d) of sub-section (1) of section 115WB has been allotted or transferred, directly or indirectly, by the employer on or after the 1st day of April, 2007, it shall be lawful for the employer to vary the agreement or scheme under which such specified security or sweat equity shares has been allotted or transferred so as to recover from the employee the fringe benefit tax to the extent to which such employer is liable to pay the fringe benefit tax in relation to the value of fringe benefits provided to the employee and determined under clause (ba) of sub-section (1) of section 115WC.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WKA. It is an enabling/overriding provision permitting the employer to recover ESOP-related FBT from the employee; it operates with section 115WKB. The no-double-recovery policy is reflected in the cognate authority below.
C-1 Policy of no double recovery (cognate)
CIT v. Hindustan Coca-Cola Beverages (P) Ltd. (2007) 293 ITR 226 (SC)
Proposition: Tax cannot be recovered twice in respect of the same liability; once the recipient has paid the tax on an amount, the same amount cannot again be recovered from the payer though interest/consequences may follow for the default period.
Why relevant: Embodies the no-double-recovery principle that underlies section 115WB(3) (perquisite already taxed in the employee's hands is excluded) and sections 115WKA-115WKB (mechanism to avoid the employee being taxed again where the employer recovers the FBT).
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced verbatim from the Income-tax Act, 1961 (text as printed in the Act, the Chapter remaining on the statute book but rendered inapplicable from assessment year 2010-11 onwards by section 115WM). Citations are stated as reported; rulings of the Authority for Advance Rulings and orders of the Tribunal are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority (including the machinery provisions imported by section 115WL) is given. This material is for professional reference and is not legal advice.