Staff Reporter

Industrialists upset over continuance of Fringe Benefit Tax

  • Entrepreneurs flay increase in Dividend Distribution Tax
  • Farmers jubilant over new funds

    Tuticorin: The fourth budget of the United Progressive Alliance Government, presented by Finance Minister P. Chidambaram, has evoked mixed reaction here on Wednesday.

    Industrialists and financial experts have termed it "ordinary," as there were anti-inflationary measures, but at the same time it levied additional cess on education and increased Dividend Distribution Tax.

    S. Krishnan, former Chairman of Institute of Chartered Accountants of India, Tuticorin branch, said that the cut on "ad valorem" duty on petrol and diesel from eight to six percent was a good tactic to combat inflation.

    "However, the Minister has nullified the `effect' by increasing educational cess to three percent from two percent and decided to continue with the Banking Cash Transaction Tax (BCTT), as both of them would generate inflationary trend," he said.

    He also criticised the decision to bring Employee Stock Ownership Plans (ESOPS) under the purview of Fringe Benefit Tax (FBT).

    Majority of industrialists expressed disappointment over the decision to pursue with the much-debated FBT and BCTT, despite opposition from different segments of society.

    D.R. Kodeeswaran, Secretary, Indian Chamber of Commerce and Industry, Tuticorin, felt ecstatic as the limits for excise duty exemption for small-scale industrial units was enhanced from Rs. one crore to Rs 1.5 crore.

    According to Raja Sankaralingam, president, Tuticorin SIPCOT Industrialists Association, allocation of Rs. 22.5 crore towards modernisation of coir industry was welcome, as it would be a boon to a large number of self-employed persons.

    Large number of entrepreneurs had criticised the decision to increase dividend distribution tax to 15 percent.

    The decision to make Permanent Account Number card as the sole identification number produced good response among tax experts.

    "It would enable the Government to keep track of capital market transactions effectively," Mr. Krishnan said.

    Farmers by and large expressed happiness that the budget had earmarked new funds for replanting of coffee, cashew and coconut.

    "Moreover, the decision to give tax exemption to NABARD's rural bonds would facilitate more credit flow in the mofussil areas," they said. Mr. Krishnan said that the move to bring Regional Rural Banks under the ambit of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act was good.