Industry & Economy
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Income Tax
India Inc makes a pitch against FBT
Our Bureau
New Delhi
,
Jan. 6
INDIA Inc has stepped up pressure for modification and even scrapping of the Fringe Benefit Tax (FBT) that was introduced by the Finance Minister last year.
While tax economist and Secretary-General of the PHD Chamber, Mr Bibek Debroy, has called FBT "bad in law and bad economics", the Confederation of Indian Industry (CII) has reiterated that the scope of FBT is unduly large with the existence of several categories of business expenditures for which no benefit accrues to the employees. It feels that expenses such as travelling, hotel boarding, sales promotion, conference expenses are genuine business expenditures and taxing them only affects the competitiveness of industries in the global market.
The newly elected President of FICCI, Mr Saroj Kumar Poddar, too has come out strongly against the tax, asking for its abolition. "Genuine expenditure incurred on business should be spared,'' he said pitching for the American system where companies make a single tax payment.
FBT was introduced in the 2005-06 Budget with the intention of taxing the perquisites or fringe benefits provided by an employer to his employees, in addition to the cash salary or wages paid and certain expenditures of companies like the ones on sales promotion and use of telephone among others. In November last year, the Government did acknowledge the industry's concern over complexity of the structure of FBT and said it was open to suggestions from the industry on simplification of the structure of the tax.
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