The Hindu Business Line : `ESOPs under fringe benefit tax a surprise'

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Chennai Feb. 28 Bringing employee stock options (ESOPs) under fringe benefit tax (FBT) has come as a surprise, according to Mr Arun Jain, Chairman and CEO, Polaris Software Lab. The FBT by itself is a complex subject and at this point of time, the valuation methodologies are not clear and it looks like another big layer of complexity has been added to the FBT.

In the last 10 years, there has been a strong orientation by the Finance Ministry towards simplification of tax structures and policies, enabling better deployment, he said.

"We were expecting some moves and initiatives towards creation and protection of Intellectual Property Rights (IPR) in this Budget given the need to develop globally competitive products out of India across verticals," he said.

India is moving up the value chain in many verticals, including information technology, and companies are doing a lot of expertise-driven business as against pure cost-arbitrage driven business in the global market place, he said.

According to Mr Jain, a lot of thought has gone behind the initiatives on infrastructure and education. The clear focus and consolidated policies on `matriculation' and `post-matric' education, plus the corpus for 1,00,000 scholarships is a `shot in the arm' in building the knowledge economy. The budget has focused on boosting infrastructure.

The critical element for the infrastructure programme is going to be in `execution.' The Delhi Government, for instance, has made a big success and impact with the infrastructure projects and perhaps some of these successes and learning need to be replicated in other States as well, he said.

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