Section 115WKB completes the ESOP recovery mechanism. Where the employer has paid FBT on the allotment/transfer of specified security or sweat equity and has recovered it from an employee, sub-section (1) deems the recovered FBT to be 'tax paid by such employee' to the extent it relates to that employee's benefit; sub-section (2), with a non obstante clause, bars the employee from claiming any refund of that payment or any credit of it against other tax. The architecture prevents both windfall and double counting.
Historical context / FA amendment trail
Inserted by the Finance Act, 2008 as companion to s.115WKA (ESOP FBT). Inapplicable from AY 2010-11 (s.115WM).
Operative consequences
• Recovered FBT is deemed tax paid by the employee, to the extent relatable to his benefit.
• The employee cannot claim a refund of it or set it off as credit against any other tax.
• Prevents both windfall to the employee and double counting of the same tax.
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 115WKB — Deemed Payment of Tax by 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, 2008 (ESOP-related), companion to section 115WKA.
A. SECTION COMMENTARY
Section 115WKB completes the ESOP recovery mechanism. Where the employer has paid FBT on the allotment/transfer of specified security or sweat equity shares under 115WB(1)(d) and has subsequently recovered that tax from an employee, sub-section (1) deems the FBT so recovered to be 'tax paid by such employee' in relation to the value of the fringe benefit provided to him (to the extent it relates to that employee's benefit). Sub-section (2), with a non obstante clause, then bars the employee from claiming any refund of that payment or any credit of it against tax on other income or any other tax liability.
The architecture prevents both windfall and double counting: the employee is treated as having borne the tax on his ESOP perquisite, but cannot convert that deemed payment into a refund or set-off. There is no reported decision on section 115WKB; the no-double-recovery / real-income policy reflected in Hindustan Coca-Cola is the nearest cognate authority.
B. STATUTORY POSITION (verbatim text)
Section 115WKB, Income-tax Act, 1961:
115WKB. (1) Where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares, referred to in clause (d) of sub-section (1) of section 115WB, and has recovered such tax subsequently from an employee, it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefit provided to such employee, as determined under clause (ba) of sub-section (1) of section 115WC.
(2) Notwithstanding anything contained in any other provisions of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section (1), such employee shall, under this Act, not be entitled to claim— (i) any refund out of such payment of tax; or (ii) any credit of such payment of tax against tax liability on other income or against any other tax liability.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WKB. It is the companion to section 115WKA, fixing the consequences of employer-to-employee recovery of ESOP FBT (deemed payment by employee; no refund or credit). The cognate policy authority is 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 115WKB completes the ESOP recovery mechanism. Where the employer has paid FBT on the allotment/transfer of specified security or sweat equity and has recovered it from an employee, sub-section (1) deems the recovered FBT to be 'tax paid by such employee' to the extent it relates to that employee's benefit; sub-section (2), with a non obstante clause, bars the employee from claiming any refund of that payment or any credit of it against other tax. The architecture prevents both windfall and double counting.
Historical context / FA amendment trail
Inserted by the Finance Act, 2008 as companion to s.115WKA (ESOP FBT). Inapplicable from AY 2010-11 (s.115WM).
Operative consequences
• Recovered FBT is deemed tax paid by the employee, to the extent relatable to his benefit.
• The employee cannot claim a refund of it or set it off as credit against any other tax.
• Prevents both windfall to the employee and double counting of the same tax.
______________________________________________________________________________________________
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 115WKB — Deemed Payment of Tax by 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, 2008 (ESOP-related), companion to section 115WKA.
A. SECTION COMMENTARY
Section 115WKB completes the ESOP recovery mechanism. Where the employer has paid FBT on the allotment/transfer of specified security or sweat equity shares under 115WB(1)(d) and has subsequently recovered that tax from an employee, sub-section (1) deems the FBT so recovered to be 'tax paid by such employee' in relation to the value of the fringe benefit provided to him (to the extent it relates to that employee's benefit). Sub-section (2), with a non obstante clause, then bars the employee from claiming any refund of that payment or any credit of it against tax on other income or any other tax liability.
The architecture prevents both windfall and double counting: the employee is treated as having borne the tax on his ESOP perquisite, but cannot convert that deemed payment into a refund or set-off. There is no reported decision on section 115WKB; the no-double-recovery / real-income policy reflected in Hindustan Coca-Cola is the nearest cognate authority.
B. STATUTORY POSITION (verbatim text)
Section 115WKB, Income-tax Act, 1961:
115WKB. (1) Where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares, referred to in clause (d) of sub-section (1) of section 115WB, and has recovered such tax subsequently from an employee, it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefit provided to such employee, as determined under clause (ba) of sub-section (1) of section 115WC.
(2) Notwithstanding anything contained in any other provisions of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section (1), such employee shall, under this Act, not be entitled to claim— (i) any refund out of such payment of tax; or (ii) any credit of such payment of tax against tax liability on other income or against any other tax liability.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WKB. It is the companion to section 115WKA, fixing the consequences of employer-to-employee recovery of ESOP FBT (deemed payment by employee; no refund or credit). The cognate policy authority is below.
C-1 No double recovery / no windfall (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.