The Hindu : Front Page : Fringe Benefits Tax to be simplified

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Thursday, Jan 12, 2006

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Fringe Benefits Tax to be simplified

Special Correspondent

If there are glitches in the manner in which the tax is administered, we can revisit it: Chidambaram

NEW DELHI: The Fringe Benefits Tax (FBT) for corporates is here to stay, though in a simplified form. For India Inc., that is some reason to cheer as Union Finance Minister P. Chidambaram on Thursday agreed to revisit the "traumatic" levy, look into the glitches, if any, and simplify it in the 2006-07 budget.

"If there are any glitches in the manner in which the tax is administered, we can revisit the matter. They [India Inc.] asked for simplification. Some simplification can be expected in the budget," he said during an interaction with the Forum of Financial Writers here.

Explaining the rationale of the FBT, Mr. Chidambaram said taxing perquisites was a universal practice as these had "both vertical and horizontal equity" while making it clear that complete withdrawal of the levy was out of the question.

Corporate consensus

Ever since the tax was introduced in the 2005-2006 budget, India Inc., through apex chambers, has been opposing the measure.

At Mr. Chidambaram's pre-budget consultations here on Monday, industrialists were unanimous in pitching for its simplification, if not removal.

"If you can't abolish it [FBT], you can simplify it," Confederation of Indian Industry president Y.C. Deveshwar told newspersons after the meeting.

N. Srinivasan, vice-president, Federation of Chambers of Commerce and Industry, said there was need to review the FBT provisions and simplify the levy. "Genuine business expenditure incurred by corporates should be allowed deduction."

Assocham chief Anil Agarwal pleaded for scrapping the FBT and sought, in its place, a two per cent hike in corporate income tax to help the Government offset revenue loss.

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