Financial Daily from THE HINDU group of publications
Tuesday, Sep 27, 2005
Financial Daily from THE HINDU group of publications Tuesday, Sep 27, 2005 |
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Industry & Economy
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Income Tax Madurai Bench HC grants stay on chamber plea on FBT Our Bureau
Chennai , Sept 26 THE Madurai Bench of Madras High Court granted an interim stay on the application of Fringe Benefit Tax on the members of the plaintiff organisation - Tamilnadu Chamber of Commerce and Industry. Mr Justice K. Raviraja Pandian granted the interim stay on a writ petition filed by Mr S. Rethinavelu, the President of the Chamber, staying the application of the tax on all the members of the chamber. The Union Government , by the Finance Act 2005, introduced a new Chapter XII-H in the Income-Tax Act, which provides for a levy of additional income-tax on fringe benefits. Under the provisions, perquisites that can be directly attributed to the employees will continue to be taxed in the hands of the employees, but the employer will have to pay the fringe benefit tax on common or unattributable expenditure related to employees. In its affidavit, the chamber has observed that the Finance Minister said in his Budget speech that the tax was on any expenditure incurred by an employer for the employee. However "from the language employed in the entire Chapter, it is clear that any payment made even to any person other than the employee or any expenditure incurred that falls within the ambit of Service Tax would also attract the provisions of the Chapter." The chamber said that the FBT "amounts to double taxation" as the new Chapter does not allow FBT as a deductible expenditure. It has observed that the FBT would discourage employers to spend on the welfare of their employees. "These provisions are very unreasonable and irrational," the chamber said.
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