The Hindu Business Line : `Move to tax ESOPs will result in double taxation'

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Chennai Feb. 28 Dubbing the Union Budget 2007-08 as `cosmetic', members of the Federation of Indian Chambers of Commerce and Industry - Tamil Nadu State Council (FICCI-TNSC), felt it lacked clarity and focus.

At a post-budget discussion on Wednesday, Mr M.R. Sivaraman, former Union Revenue Secretary, said the `outcome' budget had set targets for the upcoming year, but did not have mechanisms to evaluate progress. He added that the rural-centric budget was riding on the present economic growth and had not suggested any measures to check inflation. "The bad news is there will be further price rise," he said.

Mr S. Sundarraman, Partner with chartered accountants firm S. Venkatram & Co, felt the move to tax employee stock option plans (ESOPs) would result in double taxation. "Employees are anywaysubject to capital gains tax when they try to cash in their ESOPs. Now they will also be subject to Fringe Benefit Tax for holding ESOPs," he said.

On the move to grant `pass through' status for venture capital funding in certain industries, Mr Sundarraman said the budget had not evaluated all the needy industries before zeroing in on the selected ones. Sectors such as logistics and infrastructure could have benefited greatly if included under this umbrella, he said.

Reduction in peak customs duty rates and extension of excise duty limits to Rs 1.5 crore have failed to bring cheer to small-scale industries, especially exporters.

Mr A. Sakthivel, Vice-President, Federation of Indian Export Organisations (FIEO), said though the budget had provided relief to the textile industry, the levy of one per cent secondary education cess would be a burden for export units.