The Hindu Business Line : With Rs 1,700 cr in kitty, Centre may not yield to industry on FBT

WITH Rs 1,700 crore in its kitty as Fringe Benefit Tax (FBT) collections up to October, the Central Government is unlikely to give in to industry demands for abolition of this tax.

It is, however, not averse to receiving suggestions for fine-tuning the FBT provisions in the income-tax law.

This emerged at a seminar on FBT organised by the Indian Chamber of Commerce and Industry (ICCI) here today. Corporate India has been arguing that FBT in the present form has travelled much beyond its objectives and should be abolished.

One of the arguments put forth by the Finance Ministry for levying FBT is that this kind of tax is prevalent even in developed countries. India Inc has, however, held that the scope of FBT, which had originated in Australia and New Zealand, in the developed countries are narrow and that they are not on presumptive basis as is the case in India.

Further, certain industry associations have told the Finance Ministry that Australia has proposed to withdraw this tax altogether. Some of the members of ICCI are also aggrieved over the arbitrariness in fixing the rates and feel that this approach may be constitutionally invalid.

"Fringe Benefit Tax is conceptually wrong. It cannot be constitutionally valid. The very fact that the department had to answer about 107 questions to explain the provisions of FBT through a circular shows how complex the provisions are. Even the Revenue Secretary had recently admitted that the FBT structure was complex", Mr Lalit Bhasin, Senior Advocate, Supreme Court of India told Business Line.

He said the contention of the Government that the employers and employees are evading tax couldn't be the basis for levy of a new tax like FBT.

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With Rs 1,700 cr in kitty, Centre may not yield to industry on FBT