The Hindu Business Line : Revoke tax on bank withdrawals, fringe benefits: TN Chamber

THE Tamil Nadu Chamber of Commerce and Industry has called for withdrawal of the Bank Cash Withdrawal Tax (BCWT) and the Fringe Benefits Tax (FBT) proposed in the Budget for 2005-06.

In a letter to the Finance Minister, Mr P. Chidambaram, the chamber said: "There is absolutely no rationale or justification for this tax (BCWT) in the name of unearthing black money. Besides, the tax amounts to taxing one's own money, which is already tax suffered."

With reference to FBT, it said that the proposed levy "will result in a sharp jump in doing business" and would affect seriously even the small and medium industries and trading establishments throughout the country, making compliance more complicated in addition to adding extra workload.

The chamber said that BCWT, as proposed, would apply on several transactions.

"We genuinely apprehend that it will only aggravate proliferation of black money. People may not deposit their money in the bank ... (and) the banking culture will diminish."

The current cost of living conditions are such that even monthly routine expenses necessitate withdrawals of more than Rs 10,000 a day in metros.

Further, in certain trade and industry, payments have necessarily to be made in cash.

It is a well-known fact that black money transactions are not operated from bank accounts. If the tax is not withdrawn, at least the limit should be enhanced to Rs 1 lakh with sanction of set off facility against income-tax for the amount paid.

With reference to FBT, the Chamber pointed out that with as many as 18 categories being covered under the proposed act, the levy amounted to being a tax on the cordial relationship between employers and employees. The tax aimed at big corporates would seriously affect small industries too.

Further, the employers would be required to file two returns and the department forced to make two assessments.

"The tax is against the avowed policy of the Government to simplify the tax law. At least, a reasonable threshold limit for application of the tax should be provided immediately."

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